World Video | Defence | Foreign Affairs | Natural Events | Trade | NZ in World News | NZ National News Video | NZ Regional News | Search

 


Know the credit file risks before co-financing


Know the credit file risks before co-financing with a sibling

1 February 2013

Real estate agents have recently reported an increase in siblings co-financing on homes in order to break into the property market, but this has a consumer advocate for accurate credit reporting concerned that some siblings could be getting financially involved without understanding the full implications for their future.

CEO of MyCRA Credit Rating Repair, Graham Doessel says real risks can arise when anyone co-finances, for both their relationship and their credit rating.

“I understand it is hard for young people to get a toe in the property market, but it is so important for them to understand, when you co-finance, you must trust your personal credit rating to your sibling for the life of the agreement,” Mr Doessel says.

Real estate agents say brothers and sisters purchasing together now make up 10 per cent of traffic at open houses and inspections.

The trend, which has grown in the last three months, allows buyers to afford mortgages that would otherwise be beyond their reach on a single-income.

"It is how they're affording to break into the property market," agent Silvia Vitale of Laing + Simmons Potts Point told the Sunday Telegraph this week.[i]

But Gold Coast mortgage broker, Heather Nyssen, recently discouraged the trend, saying that siblings are usually quite young when they enter the financial partnership, and due to changes in circumstances can end up restricted by the obligation in later years.

“In some cases they buy it so one or other can live in it, or they buy as an investment property, but they often end up in a bad position,” she told Australian Broker on Thursday.[ii]

Mr Doessel agrees “Not only can the obligation restrict financial decisions in the future, but there is the potential for something to go wrong which sees both credit files defaulted if one sibling makes a mistake.”

He says if repayments on any accounts linked to the property are not made on time, both parties could be held responsible and defaulted or a late payment notation listed on both credit files accordingly.

“Rates, energy and of course finance repayments need to be paid on time every time to avoid a late payment notation on your credit file, and paid within 60 days to avoid a default listing,” he says.

Defaults remain on a person’s credit file for five years, and late payment notations for two years.

“If you have a default listing it can be difficult to get additional finance, a credit card, or even a mobile phone plan. If you have too many late payment notations against your name, it may also weigh negatively on your ability to obtain credit,” Mr Doessel says.

He recommends those siblings wanting to co-finance on a property take these things into consideration:

1. Know about your sibling’s credit history. If your sibling has financial skeletons in the closet, you should be wary about leaving your credit rating at risk. It would be a good idea to order a copy of your credit rating (your credit report) to make sure each of you is fully aware of the other’s financial history.

For assistance to obtain your credit report at no cost, contact MyCRA http://www.mycra.com.au/credit-file-request/

2. Ask what debts they currently have. This will give you an indication of how your brother or sister feel about money, and how much debt they consider normal to handle.

3. Talk about paying bills. Do they always pay them on time? If not, why not? This will give you a good indication of how important they view credit repayments.

4. Ask what their financial goals are for the future. Do they match yours? If you intend to hold on to the property whilst your sibling wants to sell in a few years to repurchase, are you prepared to pay them out? Will anyone be living in the property? How will you divide expenses on the property?

5. Get all agreements in writing. Consider getting a solicitor involved to draft up a formal agreement. You may be family, but in 5 or 10 years your responsibilities and needs may have changed and you need to know what your legal rights and obligations are.

6. Leave emotion out of it. As much as you may love your sibling – arguments can occur – particularly when money is involved. If the financial relationship is ‘strictly business’, it may be easier to separate the property from all other credit the individuals may possess. This is especially true if the property is purely an investment and neither sibling is living in the property.

/ENDS.

© Scoop Media

 
 
 
 
 
World Headlines

 

Gordon Campbell: On How Obama’s Supreme Court Choice Says Everything (Bad) About His Presidency

Nothing has epitomised the presidency of Barack Obama quite like his Supreme Court nominees. Time and again, Republican presidents will blithely nominate right wing ideological extremists (Antonin Scalia, Samuel Alito, Clarence Thomas) who only sometimes misfire and turn out to be liberals in disguise (David Souter). Yet Obama has consistently skipped over the judicially qualified liberals and gone for a succession of centrists... More>>

ALSO:

Turkey: UN Secretary-General On The Terrorist Bombing In Ankara

The Secretary-General condemns the terrorist attack in Ankara earlier today. According to the latest reports, the explosion in the Kizilay district killed and wounded dozens of people. More>>

ALSO:

Five Years On: Fukushima And New Zealand

Science Media Centre: It was the worst nuclear event since Chernobyl. In the wake of the 2011 Tōhoku earthquake and tsunami, a crippled Japanese nuclear powerplant went into meltdown, and the world watched as emergency workers scrambled to shut down and contain the reactors. More>>

ALSO:

UNICEF: 1 In 3 Syrian Children Has Grown Up Knowing Only Crisis

An estimated 3.7 million Syrian children – 1 in 3 of all Syrian children - have been born since the conflict began five years ago, their lives shaped by violence, fear and displacement, according to a UNICEF report. This figure includes more than 151,000 children born as refugees since 2011. More>>

ALSO:

Franklin Lamb: Syria’s Truce Bodes Well For Salvaging Our Cultural Heritage

The tentative cessation of hostilities in Syria, which came into effect on 2/28/2016, brokered by Washington and Moscow, is only in its second week... It is well documented that there have been daily incidents of artillery shelling, airstrikes and clashes. Yet, for the nearly 12 million displaced civilians, half of Syria’s population, it’s a much welcomed respite. More>>

Gordon Campbell: On Rubio’s Last Stand (And Sleater-Kinney)

Well, it certainly was entertaining to watch Rubio succeed in getting under Donald Trump’s skin the other day, in the last debate before tomorrow’s Super Tuesday multi-state sweepstakes... The real killer for Rubio was that the most recent poll from Florida which shows him losing his home state to Trump by a huge margin in the primary due on March 15. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
World
Search Scoop  
 
 
Powered by Vodafone
NZ independent news