Getting a Home Loan in Australia if you're living overs...
29 Nov 2023
In terms of fun activities you can do with your partner, talking about your finances is probably pretty far down the list. But the simple fact is, owning the home you live in, travelling overseas, or even buying an investment property, is pretty sexy. But unless you have an open line of communication and know what each other's financial goals are, there is little chance you’ll be able to achieve these goals.
We’ve put together a guide on how to talk financial goals with your significant other to help you reach them.
Before you do anything it’s vital you assess where both of you are at in your life financially. You don’t want to make plans to buy a house and then find out your partner has been bankrupt twice and is in a mountain of debt. Before making any significant financial decisions, sit down with each other and find out things like:
How much savings you have,
What debts you have, if any,
What investments you have, if any,
What assets you have.
This doesn’t have to all be done at once. Talking about finances can be a draining subject, especially if one or both of you aren’t where you’d like to be financially. Consider taking things slow and breaking up the conversations to avoid stress. Furthermore, this isn’t something which needs to be done early in a relationship, just if you are considering a large purchase or significant life decision. You don't want to scare someone off by talking about debt on the first date.
This is arguably one of the most fun aspects of talking finances with your partner. Your goals should be achievable and your partner should understand why they’re important to you. Some common financial goals couples have are:
Saving for a wedding and honeymoon
Paying off debt
Saving for children
Additionally, if you each have individual financial goals, set these out too. You don't want to get so caught up in wanting to buy a house together, you leave behind individual goals like growing an investment portfolio.
Understanding the benefits of working together financially can be a sure-fire way to motivate you to achieve your goals. For example, achieving your homeownership dream is drastically easier as a couple than it is as a single. According to CoreLogic, the national median house price is $574,872. Using this as an example, if you want to buy a home with a 20% deposit and avoid Lenders Mortgage Insurance (LMI), you’ll need to come up with almost $120,000. That’s more than what most people earn in a year, so putting together two incomes can make saving for a deposit far easier. A shared income can also massively increase your borrowing power, help with paying upfront fees like LMI and stamp duty.
Prior to making any significant financial decisions, it's vital you discuss how things will be structured. No one goes into a relationship planning to break up, but these things happen and it’s important to have a contingency plan.
For example, if you were looking at buying a home together, will you be joint tenants or tenants in common? Joint tenants mean you both own 50% of the property, regardless on how much deposit you each contributed. Tenants in common takes into account how much you both contributed; if one of you contributed 75% of the deposit then that’s how much of the house they would own. Such arrangements can help if you were to break up or one of you passed away.
Setting lofty financial goals is great in theory, but unless you put them into practice there’s no point making them in the first place. Being in a relationship can make things easier as you have another person to hold you accountable. If your partner is splurging too much, ask them to cut back and explain to them it’s hurting both your chances of achieving your goals.
If one of your goals is buying a home, check out just how much greater your borrowing power could be with the two of you, using our calculator here.
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.