subject: Turbulent times - arguments against joint mortgage [print this page] Turbulent times - arguments against joint mortgage
It's that time of year again. When summer comes I always think about getting a home - you know, detached property with a nice, large garden and a garage. The problem is, just like last year and year before that I can't make myself to accept the concept of giving a considerable portion of my wages away to cover the costs of mortgage. One could argue that by spreading a 200k mortgage over some 30 years I could minimize the impact of monthly payments on my monthly budget and start building wealth as opposed to just paying my landlord's mortgage but it still doesn't convince me.
The problem is, I can't bear the though of being bound by a financial commitment for some three decades. Quite frankly this may not be as bad since I've heard of "2 generation" mortgage loans in Japan - but until I investigate further, please do not quote me on that.
I have been considering a joint mortgage as this would significantly decrease the repayment period and bring me peace of mind some 15 years earlier but still found some arguments against it. Overall, joint mortgage is a magnificent financial tool for those who are not afraid to take responsibility for a 30 years loan. My approach to the subject is laid down below.
When one person falls out of joint mortgage. Although I do not expect any changes in my relationship in the foreseeable future, the truth remains that people argue, and eventually split. If you live and work together, and have a shared budget on top of that, imagine how much of a problem it would be to share a good car - assuming that both parties are not keen on compromise and charitable gestures.
Now imagine how much of a nightmare a joint mortgage is to split after a divorce. It's not only the emotional trauma that you need to deal with - it's your spouse's solicitors as well. The options to remove a person from a joint mortgage loan are rather scarce - you can either buy the leaving person's equity, rent it or have someone else jump right in and pick up the payments (obviously while properly reimbursing the previous owner).
What happens when there isn't anyone on hand to pick up the payments? You need to take care of them all by yourself and that's what scares me the most. You will have to either pay a double mortgage and hope for good conditions for a refinance or face a very likely repossession.
