Co-Borrower Guide

Thinking of borrowing with someone else?

At a glance

When you choose to borrow money with other people – whether it’s to purchase a new property, refinance an existing home loan or top up your existing home loan because you need additional money – you all become ‘co-borrowers’. It’s important for each borrower to understand their rights, obligations and what the potential risks are, when they choose to borrow money with someone else.

This guide outlines important information to consider before applying for a home loan with someone else.

Key considerations for Co-Borrowers

What you’ll need to know

All borrowers will be on the home loan application – so your financial information such as income, assets and liabilities will be visible to all other borrowers. We’ll use the information provided by all borrowers when we review and assess the home loan application.

Risks and Financial

• Each borrower is jointly and severally liable. This means you are responsible for the total debt and repaying the whole amount, in the event the other borrower(s) can’t or won’t pay.

• In the event of a default in repayments, we will give all borrowers notice to correct the default. If the default is not corrected, your credit rating may be affected.

• If a default is not corrected we can also exercise our right to sell the security property, which means you could lose your property if this happens.

• If the proceeds from the sale of the security property do not cover the outstanding balance, including any fees and charges for your home loan, it’s important to understand you may still owe a debt to us.

• Failure to pay any outstanding loan amount may result in adverse credit rating for all borrowers.

Other considerations

• If you’re not sure about your obligations before signing the home loan contract, please talk to your Solicitor and/or Financial Advisor.

• If you are feeling pressured into applying as a co-borrower on a home loan, please let your Home Lending Specialist know immediately.

• It’s important to consider who you are signing a home loan contract with and be aware of the impacts of relationship breakdowns and your obligations as a co-borrower.

Will this home loan benefit you?

Under the Banking Code of Practice, we need to consider the ‘benefit’ you will receive from the home loan and are required to assess whether you are receiveing a ‘substantial benefit’ from the loan.

Benefit

This means you’ll:

• Receive some benefit, but less than other borrowers on the loan for the use of the loan funds, e.g. for assets purchased (property or a car), debt refinance or other acceptable loan purposes, or

• Receive a non-financial benefit, such as living in a property or driving a car registered in your co-borrower’s name.

Substantial benefit

This means you’ll:

• Benefit at least the same amount as other borrowers on the loan for the use of the loan funds.

If you won’t receive a substantial benefit from the loan, we will only accept your home loan application if:

• You understand the risks of being a co-borrower;

• You have provided and acceptable reason for becoming a co-borrower; and

• We are satisfied you aren’t experiencing financial abuse.

‍Examples

Here are some examples to help demonstrate whether or not you will receive a substantial benefit.

Loan Purpose	How will the funds be used? Do you receive a substantial benefit?
To purchase a property	You're purchasing a house with your partner and you will each own 50% Yes You're purchasing a house and you will own 20% of the property while your partner will own 80% No
To refinance credit card debt	You're refinancing your own credit card debt Yes You're refinancing someone else's credit card debt No
To pay for a holiday	You and your partner are going on a holiday and 70% of the loan funds will be used to finance your share of the holiday expenses Yes You and your partner are going on a holiday and 30% of the loan funds will be used to finance your share of the holiday expenses No

‍If you decide not to proceed as a Co-Borrower

You can choose to withdraw your consent for the home loan application so long as you have not received any credit under the contract.

Withdrawal of consent can be given by:

• Contacting your Home Lending Specialist directly; or

• Writing to us at the email address listed below.

Co-Borrower Guide