Understanding the Risks: Name on Mortgage But Not on Title Australia

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When buying a family home, one common question many ask is: Is it possible to have your name on mortgage but not on title Australia?

Yes, it is possible to have your name on a mortgage but not on the title of a property in Australia. This is known as a “guarantor” loan.

A guarantor loan is a loan where a person (the guarantor) agrees to be responsible for the loan if the borrower defaults. The guarantor is not the legal owner of the property, but they are still liable for the debt.

Guarantor loans are typically used by people who cannot qualify for a mortgage in their own right, such as first-time home buyers with little deposit or people with bad credit.

There are a few reasons why someone might want to have their name on a mortgage but not on the title of a property. For example:

  • A parent might want to be a guarantor on their child’s mortgage to help them buy a home.
  • A spouse might want to be a guarantor on their partner’s mortgage, even if they are not planning to live in the property.
  • A business owner might want to be a guarantor on a mortgage for a commercial property.

Is It Common for a Married Couple to Buy a House Under One Name in Australia?

According to a 2021 report by the Australian Bureau of Statistics, 62% of owner-occupied properties in Australia are owned by couples. Of these couples, 53% own their property jointly, and 47% own their property in one name only.

This means it is relatively common for a married couple to buy a house under one name in Australia.

However, it is important to note that several factors can influence a couple’s decision to do this, such as their financial situation, tax planning goals, and personal preferences.

Understanding Two Borrowers One Owner: How Does It Work?

Here are some reasons a married couple might choose to buy a house under one name:

  • One spouse has a better credit history than the other. This can make it easier for the spouse with a better credit history to qualify for a mortgage and get a better interest rate.
  • One spouse earns more money than the other. This can make it easier for the spouse who earns more money to afford the mortgage repayments.
  • One spouse wants to protect the property from their creditors. If one spouse has a lot of debt, the other spouse may want to own the property in their name only to protect it from creditors.
  • The couple is planning to sell the property in the near future. If the couple plans to sell the property soon, they may want to own it in one name only to simplify the sale process.

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Risks and Rights: When a Co-Borrower Is Not on the Title

It is important to note that buying a house under one name also has some potential drawbacks. For example, if the couple separates or divorces, the spouse who owns the property may not be willing to share it with the other spouse.

Additionally, the spouse who owns the property may be liable for all of the property’s debts and liabilities.

If you are a married couple considering buying a house under one name, seeking legal and financial advice from an experienced conveyancer is important to understand the risks and benefits involved.

One Name on Title, Two Names on Mortgage in Australia: A Legal Case

Balog v. Balog [1993] FLC 92-341

The husband held the title to the matrimonial home, while both parties were responsible for the mortgage.

Upon their relationship’s dissolution, the contribution of each party towards the property, both financially and non-financially, was brought under scrutiny.

The court considered various factors, including the mortgage payments made by each party, their role in the family, and their contributions to the property’s upkeep and improvement.

The decision emphasized that even if one’s name isn’t on the title, their contributions to the property and the relationship’s welfare would be acknowledged and could impact the property settlement process.

The case highlighted the importance of each party’s contributions and reiterated that the legal title (name on the title) does not exclusively dictate property rights.

The case serves as a reminder to couples in Australia of the potential legal implications of their financial and property decisions, underlining the importance of obtaining legal advice before entering into such arrangements.

Implications of Having Your Name on the Mortgage But Not on the Title

Having your name on the mortgage but not on the title of a property can lead to several implications, particularly concerning financial liability, legal ownership, and rights to the property.

This situation means for individuals in such circumstances:

  1. Financial Liability Without Ownership Rights: If you’re on the mortgage, you’re legally responsible for repaying the loan. However, not being on the title means you don’t have legal ownership of the property. Essentially, you’re paying for a house that, by law, you don’t own.
  1. No Control Over Property Decisions: Legal titleholders make all decisions regarding the property, including its sale, use, and alteration. You have no say in these matters without your name on the title, despite your financial contribution through mortgage payments.
  1. Risk in Case of Default: If mortgage payments are not made, and the property enters foreclosure, your credit score will be affected, and you could be pursued by the lender for repayment. The titleholder’s property may be at risk, but so is your financial future.
  1. Complications in Relationship Breakdowns: If an unmarried couple splits or a dispute arises between individuals, not having your name on the title complicates matters. You may have to go to court to prove your financial contributions and claim a right to the property, which can be a complex, lengthy, and costly process.
  1. Issues with Estate Planning: If the titleholder passes away, the property might not automatically pass to you. It will depend on the deceased’s will (if one exists) or state laws on intestacy if they died without a will. You could potentially face a situation where you’re still obligated to pay the mortgage on a property you may never inherit.

Given these implications, it’s crucial for individuals considering or currently in this position to consult with legal and financial professionals. Understanding your rights and exploring mechanisms to protect your financial interests is essential, such as drafting a cohabitation agreement or seeking a change in the title to reflect joint ownership.

What are My Rights If My Name Is Not On a Deed in Australia?

Suppose your name is not on a property deed. In that case, your rights can vary depending on several factors, including your relationship with the owner, any agreements you may have, and specific state laws.

Here’s a general overview of considerations and potential rights:

  1. De Facto or Marriage Relationship: If you are in a de facto relationship or are married to the property owner, you might have rights to the property in case of a relationship breakdown or divorce, even if your name is not on the deed. Family Law Courts in Australia can order a division of property based on factors such as the duration of the relationship, contributions made by each party, and future needs.
  2. Contributions to the Property: If you have contributed financially towards the mortgage payments, renovations, or maintenance of the property, you may have a claim under the principles of trust law. For instance, you might argue that a constructive trust has been created, giving you a beneficial interest in the property.
  3. Other Agreements: If there is an explicit or implicit agreement that you would have an interest in the property despite your name not being on the deed, such an agreement might be considered under common law or equitable principles, particularly if you can provide evidence of this agreement and your reliance on it.
  4. State Laws: Property rights can also vary significantly from state to state. For instance, in some states, there might be specific provisions for domestic relationships or claims against estates if the property owner passes away.

These points provide a starting framework for understanding your position, but the specific details and outcomes can vary greatly depending on individual circumstances.

Tangled in a ‘name on mortgage but not on title’ situation in Australia? 

It’s a complex spot, but you’re not alone! Walker Pender’s experienced team understands the intricacies and is here to guide you.

Protect your property rights and financial interests by reaching out to us.

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