If you take out a loan from the bank, you can either sign the contract alone or together with someone else – for example, your spouse or life partner. Before you decide on one of the two variants, you should know the respective advantages and disadvantages.
The joint signature under the loan application can bring about an improvement. An example: If one of the two partners can only show a small income of their own due to a break in their professional upbringing, the partner’s co-commitment ensures that sufficient income is available to pay the monthly loan installments.
A joint loan does not change form compared to a traditional loan
there is a fixed or variable interest rate and an amortization plan for the repayment of the loaned capital. Why then choose the joint account? The most common possibility is that the applicants apply. This usually happens when both have become owners of the house , as enshrined in the contract of sale. In this case, the two mortgage holders must present the same documentation, which is the same as for the opening of the loan by a single person: documents attesting to the family and income situation, in addition to the deed of sale. Here you will find the list of necessary documents.
Both borrowers are liable for the overall loan
On the other hand, you should be aware of the consequences when entering into a loan agreement. From the bank’s point of view, this means that it has two equal borrowers as contractual partners. If the repayment process goes smoothly, the lending bank will always debit the installments from the account specified in the contract. From a legal point of view, the bank is entitled to use either of the two borrowers to repay the loan.
In an emergency, this means that if the monthly repayment installments are not paid on time, the second contractual partner must step in immediately and is fully liable for the remaining debt. So if you sign a loan agreement, it has the same effect in terms of liability as if you were the sole borrower.
Community of use and financing
Against this background, joint borrowing is particularly advisable if the borrowers live in an economic community anyway and want to secure a particularly good credit rating with the joint liability assumption. Even if the purchase financed by the loan is used by both partners, which is often the case when financing a car, the joint loan fits the shared financing object.