A joint bond when you live together unmarried
Joint bonds are popular, says Steven Barker, head of home loans at Standard Bank, accounting for at least 40% of total home loan applications.
“We find the majority of joint bond applications are by married couples, but there are also numerous applications that come through from unmarried couples,” he says.
In this scenario, you need to be fully aware of the risks of a joint bond.
“The main risk is that you are not responsible for only 50% of the debt. You are jointly and severally responsible, which means that if anything goes wrong, you could be held wholly responsible for 100% of the debt,” Barker warns.
This would be the case if the other bond holder dies or absconds – leaving you holding the debt.
If you are going to enter into a joint bond agreement, you should have a legal document drawn up to protect yourself financially. You should also take out life cover that will settle the bond if either bondholder dies.
“A joint bond may seem to be the answer for affordability issues, but many people fail to realise that unwinding a joint bond, for whatever reason, is never simple,” Barker says.