Owning property with a partner can be a rewarding way to get onto the housing ladder, but life circumstances often change. Whether it’s due to marriage, divorce, separation, or one party wishing to exit the agreement, many homeowners eventually face the question: how do you change partners on a joint home loan in South Africa?
The process may sound complex, but with the right steps it can be managed smoothly. Below is a detailed guide to help you understand what’s involved.
Understanding a Joint Home Loan
A joint home loan is a financial agreement where two or more parties are equally responsible for repaying the bond. Banks usually assess the combined income and credit profiles of all applicants, which makes it easier to qualify for a larger loan amount. However, this shared responsibility also means that each party is equally liable for the debt, regardless of who is living in or using the property.
Why Homeowners Change Partners
There are several common scenarios where homeowners may want to change partners on a joint loan:
- Divorce or separation where one party wants to retain ownership of the property.
- Marriage or new partnerships, where a spouse wishes to be added to the home loan.
- Financial restructuring, such as one partner no longer wishing to be held liable for debt obligations.
- Investment partnerships changing when one investor exits and another takes their place.
The Process Step by Step
1. Get Bank Approval
The first and most important step is obtaining consent from the bank that issued the home loan. The lender must agree to release the exiting party from liability, which only happens if the remaining or new applicant(s) can prove they are financially capable of servicing the loan on their own or with the new partner.
2. Financial Assessment
The bank will reassess the income, credit history, and affordability of the remaining and/or new applicant. This is essentially a new loan application. If the affordability test fails, the bank is unlikely to approve the change.
3. Legal Documentation
Once the bank grants approval, the next step is to update the legal paperwork. A conveyancing attorney will draw up the necessary documents to reflect the changes in ownership and bond liability. This includes:
- Updating the title deed at the Deeds Office.
- Amending the mortgage bond agreement.
- Ensuring transfer duty (if applicable) and attorney fees are paid.
4. Settlement of Fees
Changing partners on a joint home loan is not free. You will likely need to pay:
- Conveyancing attorney fees.
- Administrative costs charged by the bank.
- Transfer duty, if the transaction qualifies as a property transfer under tax laws.
5. Registration at the Deeds Office
Finally, the conveyancer registers the updated documents at the Deeds Office. Only once this registration is complete does the change become legally binding.
Important Considerations
- If one party is buying out the other, a property valuation may be necessary to determine fair market value.
- Tax implications should be reviewed, especially if transfer duty is payable.
- In the case of divorce, the settlement agreement should align with the changes being made to the home loan.
- The process can take several weeks depending on bank approvals and Deeds Office timelines.
Final Thoughts
Changing partners on a joint home loan requires careful planning, professional legal assistance, and bank approval. While it involves time and costs, it is a vital step in ensuring that property ownership reflects your current life circumstances.
If you are considering this process and need to explore your options for refinancing or taking over a bond, you can start by browsing available properties and financing advice on ImmoAfrica.
