Taking out a joint loan: what you need to know

Many couples take out a joint debt or loan. As a couple, you might be able to borrow more money. But it’s a serious step because each of you could be asked to repay the full debt if the other person is unable to.

What types of loans and debt can be taken out jointly?

There are several types of credit can be taken out jointly, including:

  • secured loans – such as a mortgage
  • joint bank accounts that have an overdraft facility
  • unsecured loans – such as a personal loan from a bank or other lender.

Who is liable for joint debt?

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When you take out a joint loan with someone else you might think that you’re only responsible for your ‘half’ or share, but that’s not the case.

By signing a credit agreement (a contract) for a loan or overdraft with someone else, you’re each agreeing to pay off the whole amount if the other(s) can’t or won’t pay. It doesn’t matter who spent the money, or who now owns the item or items you bought with the joint loan or overdraft. And it doesn’t make a difference whether you’re married, in a civil partnership or even if you’re not in a relationship at all.

In legal language, this is called ‘joint and several liability’.

In other words, having any joint credit agreement means that you’re both jointly responsible for complying with it and paying what’s owed on it.

So if the other person doesn’t pay anything that’s owed, you could end up with a lot of debt.

For example:

  • if your husband, wife or partner dies, you’ll still need to repay any joint mortgage
  • if you break up with your partner, they could still run up a debt on a joint bank account if there’s an overdraft facility – leaving you with the total bill.

What about credit cards – can they be taken out jointly?

In the UK, credit cards can’t be taken out jointly – even if you and your partner each have a card.

There’s always only one person responsible for anything that’s borrowed on the card. This is the main cardholder – the person who has signed the credit agreement.

But the main cardholder might let someone else have a credit card on the same account.

This secondary cardholder doesn’t have a legal responsibility to make any payments to the credit card company.

Can a joint application improve your chances of getting credit?

If you apply for a loan together, the lender will look at both your credit records when assessing affordability. This means you might stand a better chance of being accepted.

But the loan will also appear on both your credit reports. This means if there are any problems paying it back, such as late or missed payments, both your credit ratings will be affected.

This might affect your ability to borrow money in the future. 

Acting as a guarantor

If someone – usually a parent – is willing to act as a guarantor for you, this can help you get a loan or a mortgage.

Being a guarantor means you’re responsible for repaying the loan, if the person who took out the loan is unable or won’t.

It’s not something you enter into lightly as there are serious financial risks involved for the person guaranteeing the loan. 

If someone – usually a parent – is willing to act as a guarantor for you, this can help you get a loan or a mortgage.

Being a guarantor means you’re responsible for repaying the loan, if the person who took out the loan is unable or won’t.

It’s not something you should enter into lightly as there are serious financial risks involved for the person guaranteeing the loan.

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Debt as financial abuse

If your partner is running up debts in your name, or pressuring you to sign up for credit, this is financial abuse and you don’t have to put up with it. There’s help and support out there.

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MoneyHelper is the new, easy way to get clear, free,
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Whatever your circumstances or plans, move forward with MoneyHelper.

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Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

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