Singles And Banking

2021-02-12   |   by CusiGO

With Valentine’s Day approaching, many people will realize that having a partner is not everything, but it often helps. What’s more, those who have not yet found love will do so, and they are very aware of the possible adverse effects of this situation. One of the problems is that the family economy must be maintained without the sometimes decisive contribution of others. So goodbye, not only to share the paella or supermarket savings package, but also to thank the bank for the most favorable terms usually offered when there are two signatures instead of one in the mortgage contract. But are other financial products the same? Or is it just inconvenient to be forced to spend another year at the saint bachelor party?

On the head of those who don’t have a partner, there is a sword of Damocles, called “singleness rate”, which is more economical than what single men are forced to pay, because their living standard is the same as that of their partner. There is also a special tax when applying for a mortgage. “The problem with singles is that the whole deal is more risky,” says Simone columbelli, head of mortgage at banking comparator. “The debt ratio is basically determined by the person’s salary, so you have to pay more than a partner with the same characteristics,” he added.

In fact, if you can’t count on the support of another holder, the chances of getting the best conditions will be reduced. For the 300000 Euro housing, the initial capital contribution is 60000 euro, the financing is 240000 euro, the 30-year mortgage loan, the borrower pays about 8000 euro per year or 665 euro per month, plus interest. In order that mortgage payments do not exceed 35% of income, a net income of at least 1900 euros per month should be obtained. “It’s a complex issue, because according to ine, Spain’s average annual total wage is about 24000 euros,” iahorro explained.

As a result, it’s not surprising that single people are asking for smaller, and therefore cheaper, houses to finance. On the one hand, the average amount funded by a couple was 188923 euros, while transactions with only one holder were reduced to 130557 euros, a 31% decrease. On the other hand, according to the mortgage data established through iahorro last year, the average house purchase price in this case is about 183424 euros, and if there is co ownership, it is 253973 euros, an increase of 38%.

“In general, single people usually want to have a smaller home in the city. Their savings efforts are greater, and the remaining income after deducting the mortgage line is a key variable in this situation, and a reason why many banks may give up this business,” stressed colombelli. It’s no accident that 64% of the mortgages iahorro measures in 2020 have more than one holder, and only 36% are signed separately.

However, not everything is easier to pair. The same loan obtains more favorable conditions from two loans and may become an disharmonious third party in any relationship. Having one or more joint holders carries risks because all the people signing the loan bear the same liability for the debt. If they do not pay the loan, they will be liable for the debt, They divide the payment equally with their own money. Until everyone puts their share, everything is fine, but things get complicated when a title doesn’t fulfill its share. Then, the lending institution will demand repayment from everyone equally.

Only in the future can co ownership require the other party to take responsibility, which is “complex” in the view of ihoro tildan. In this case, they suggest that it is better to provide a loan guarantor, a number that only involves debt default. “Their ability to borrow will not be limited because they are not directly responsible for the loan,” they stressed.

They also suggest that if the person who really needs the money is not eligible for it, or if he / she has a bad record, don’t make the mistake of borrowing for others. “This is a dangerous move because the only person responsible for the debt will be the person listed as the loan holder,” they warned.

There are other financial products, the existence of two or more holders will make their situation worse. A clear example of this is the bank account, as there may be additional maintenance or co branded card related costs, since the former is usually free, but the latter involves additional costs.

In addition, when sharing the income deposited in the account, unless otherwise specified, the tax of the account shall be shared equally between the husband and wife, even if the contribution of one of them exceeds that of the other. The same applies to any investment product. For example, there is no restriction on setting up a multi holder investment fund, but the tax impact will be proportional to the number of holders, regardless of everyone’s contribution. “Once you start investing, you can’t add or remove titles,” iahorro warned.