Band Together To Get A Bond

Aspirant buyers struggling to get mortgage bond approval might look at a co-ownership agreement with friends or family. The banks are quite happy to lend a hand…

Although bond applications in the first quarter of this year (2011) reached their highest level in three years, aspiring home owners are still struggling to get mortgages. As a result, applying for a joint mortgage bond is becoming more attractive for people trying to enter the residential property market. It is not unheard of for couples, whether husband and wife or about-to-be-weds, to apply for bonds, but the current trend goes beyond this — with friends grouping together to source finance and enter into joint ownership agreements.

Absa Bank’s home loans division says that it does not restrict the number of members.

Furthermore, the lending banks are looking favourably on such arrangements as an alternative to suretyships under which recovery of debt in cases of default is often difficult. Now they prefer guarantors signing as co-owners.

In a recent poll, 38 percent of people surveyed believe that partnering with friends or relations to get a bond is a positive option. 36 percent of those surveyed were opposed to the option, feeling that it posed too much of a risk, and 26 percent believe that it should be considered but only if absolutely necessary.