Hi, I just opened a joint account with my partner and I’m really looking forward to budgeting with someone else. This may be more of a banking question than specific to Monzo, but I couldn’t find the answer elsewhere. Before I opened, I was warned that our credit ratings would be linked, which is fine. I have a mortgage that is only setup in my name (not a joint mortgage). I was wondering whether it’s ok for me to change the direct debit for the mortgage repayments from my personal current account to it coming out of the joint account?
My considerations are, what can the lender see? Do they care as long as they get the money? Will it raise red flags if all of a sudden they see two people are repaying (even though it’ll primarily be me putting money into the account)? Is my credit history tied to the new joint account and if so, will that be a deciding factor when I come to change or renew the mortgage?
I’m fairly comfortable moving all my other direct debits over, it’s just this one I have questions on.
Never had a joint account before, so sorry for the dumb questions!
A joint account, legally speaking, is just an account with two account holders.
What this means is that either of the account holders can manage the account or take money out, etc. Either one of the account holders can even spend all of the money in the account. So, if you think about it this way, then what you are doing by paying your mortgage out of a joint account is no different to if you pay it out of your sole account. It is simply you paying your mortgage out of one of your accounts.
The “linking” of the two account holders is only really at the credit report level - it doesn’t change how your account is treated by other banks. Really, it is just a warning that if you open a joint account with somebody who has a poor credit history their details will be linked to yours. This could affect your creditworthiness in the eyes of lenders - especially for taking out a loan or mortgage. But it doesn’t mean your existing mortgage is likely to be affected. I hope that makes sense!
What will change, subtly, and over time, is the question of ownership of the property, should you and your partner ever split up.
Without me wishing to pry into the nature of your relationship; as you pay the mortgage from an account from which the funds are legally owned by both of you, your partner begins, in the eyes of the law, to fund the mortgage. How this will actually affect the outcome of any legal proceedings as things get more complex in 5, 10, 20 years I don’t know (because I am not a lawyer, and because this will constantly change depending on a whole host of factors, such as the length of time you’ve been together now, the length of time you’re together before you split, if you have or don’t have children, how the joint account continues to be funded etc.) but it will affect things.
What you and your partner need to fully understand (but especially you, as the ‘name’ on the deeds) is that the legal position on a claim on the property will shift over time, and if things get messy at the end and you find yourselves in court arguing your respective cases to a judge. Remember this will feel like it applies not only if there is profit to be shared, but also if there is a shortfall on the mortgage in the event of negative equity and thousands of pounds needs to be ‘found’ from somewhere in order to finalise a financial split.
Whilst this in no way is meant to put any doubt in your mind about your current life choices, and without knowing if you’ve been together 20 years already, or six months, it’s a fact of co-habiting which is very real, and should be entered into by both of you with your eyes open.
My advice is in no way a judgment on your lifestyle, and is purely meant to be taken as a neutral discussion point.
So I guess I didn’t give enough details and I’m offering these of my own free will - I’m aware you didn’t explicitly ask for them. We’ve been living together for some 4 years now, have a child together, but aren’t married (but will have a civil partnership soon). When I first bought the property and this was before our son was born, because I needed to declare my partner would be living with me, she had to sign an agreement that basically waives her rights to any future claims on the property. I have a copy of this online and a hard copy, but have forgotten the name of the document. I agree that our lives have changed substantially since it was signed, but I tend to agree with the opinion that moving my direct debit to this joint account opens me up to potential financial risk should anything go wrong in the future. For example, when the civil partnership is finalised, any debts in the joint account would be the responsibility of my partner should something happen to me.
Looking on the relationship side of it, it might seem like I’m talking without emotion, but honestly this is similar to a prenuptial agreement and is about protecting myself should something go wrong. I promise, I’m not a robot!
I’ve decided that it’s too much risk for me to move over that direct debit, but everything else will be absolutely fine. I have discussed with my partner and she agrees. Thank you so much for the advice and I absolutely took it as neutral and non-judgemental.
I don’t think you talk like a robot. Indeed, your preparation and consideration in these practical matters is a good thing.
As you have a child, my advice is somewhat overcautious, because the child’s (and primary care giver’s) needs will always come first. And once you’re both in a civil partnership, this will override the ownership agreement signed originally anyway.
Congrats on the civil union by the way.
We moved our mortgage into our joint account last year, no issue at all on the mortgage company side or impact on credit ratings and the like.
As others have said, perhaps it could have legal impacts if you were ever to breakup in future but there’s something quite nice about both parties have all the main bills visible and just leaving personal spending to the personal accounts.
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