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

 

Amnesty: Campaign Mass Hangings And Extermination At Syrian Prison

A chilling new report by Amnesty International exposes the Syrian government’s calculated campaign of extrajudicial executions by mass hangings at Saydnaya Prison. Between 2011 and 2015, every week and often twice a week, groups of up to 50 people ... More>>

Russian Hack Job?: White House - Actions In Response To Russian Malicious Cyber Activity & Harassment

President Obama authorized a number of actions in response to the Russian government’s aggressive harassment of U.S. officials and cyber operations aimed at the U.S. election in 2016. More>>


Israel/Palestine: Michael Field - Background To How Israel Nearly Went To War With New Zealand

New Zealand and Senegal managed to get the United Nations Security Council to pass resolution 2334 which said Israel’s settlements in Palestinian territory violate international law and undermine a two-state solution in Israel's conflict with Palestine. More>>

ALSO:

US Indigenous Affairs: How President Obama Has Protected Our Sacred Land

I am very proud to be both Navajo and American. As the President of the Navajo Nation, I’ve dedicated my life to ensuring that, as a Navajo, my story -- and our stories -- are part of our collective American history. Today, I want to share one of those stories with you. More>>


Binoy Kampmark: The Berlin Truck Attack And The Refugee Question

The hard-nosed neo-cons were certainly showing little interest in linking arguments, examining evidence, or even considering elementary logic in the aftermath of the Berlin truck attack near the Gedächtniskirche. With the bodies fresh in the morgue, former US ambassador to the United Nations, John Bolton, peered into the mind of the everyday German, and found teeth chattering fear. More>>

Demonetisation: Gordon Campbell On India’s Huge Socio-Economic Experiment

Without much coverage at all in the West, India has just been engaged for the past few weeks in one of the world’s biggest socio-economic experiments since the Cultural Revolution in China. More>>

Gordon Campbell: On The Death Of Fidel Castro

New Zealand likes to think we played our part – via the 1981 Springbok tour – in bringing the apartheid regime in South Africa to an end… Jacob Zuma treated the death of Fidel Castro at the weekend as an occasion to pay a heartfelt tribute to the thousands of Cuban soldiers who travelled across the world to inflict the first significant military defeat on the forces of white supremacy. More>>

ALSO:

Get More From Scoop

 
 
 
 
World
Search Scoop  
 
 
Powered by Vodafone
NZ independent news