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When your relationship reaches the point of buying a home together, it’s an exciting milestone. But what if you already own your home solo? Is adding them to the title less romantic and more hassle? Far from it!
Updating ownership ensures your partner can share decisions and security about your cornerstone asset. In this expert-written guide, we will break down all the legal hurdles, emotional considerations, and financial complexities involved in adding your partner to your property title in Australia.
Quick Summary
- Adding a partner to your property title in Australia has legal, financial & relationship implications
- Process varies based on if you have a mortgage or own the home outright
- Choose between joint tenancy (equal ownership) or tenants in common (can be unequal)
- If mortgaged, you must refinance to add partner to the loan too
- Benefits: greater protection for both parties, relationship equality, shared gains
- Risks: eligibility based on partner’s financials, costs, complexity if relationship ends
- Always get legal & financial advice first to understand requirements & impacts for your situation
Property Title Vs Loan
Let’s clarify some things before we go any further. There’s a massive difference between being on the property title and being on the home loan, and sadly, this is where many people get tripped up.
The property title is a legal document proving you own your house. If you sell, you get a share of the profits or losses. Being on the title gives you the rights to the asset or the home itself.
The home loan or mortgage is the debt you owe to the bank or lender. Being on the loan makes you legally responsible for mortgage repayments even if your name isn’t on the title.
See the distinction? You can have one without the other. So you can be on the home loan without being on the title. This may seem odd at first, but it’s all about the bank protecting its investment.
Let’s break it down further into two scenarios. Most home buyers find themselves in.
Adding your partner to your property title when you have no mortgage
If you are one of the lucky few people who own your home outright without a mortgage, congratulations! You have a lot more flexibility when adding your partner to the title. This is usually done through a transfer of title. One thing we can’t stress enough is not to do the transfer yourself. A conveyancer or property lawyer is going to be your best friend here. They’ll make sure the paperwork is filled out correctly, protecting both your interests. They also look at the available types of ownership, which we come back to a bit later in this article. A lawyer can also investigate the costs associated with adding your partner to your property title. Stamp duty isn’t always going to be payable if you’re adding a partner to the property. You may be able to avoid paying stamp duty if you’re married or in a defacto relationship. But this does vary from state to state, so get legal advice about this.
Adding your partner to your property title when you have a mortgage
This is where the majority of people are going to fall. If you’re still paying off your mortgage, the banks and lenders will get a big say in how you transfer the title. Why? Because at the end of the day, they’re trying to ensure that their investment — your mortgage — is secure. Here’s the general rule of thumb: if your partner isn’t going to be on the loan, that means they’re not legally liable for the debt, but they also can’t get onto the title— the bank won’t consent to that. Your partner must be both on the title and loan for the bank to be happy. This is where you will have to refinance your loan with your partner and change it from a single loan to a joint loan.
This is where it can get a little bit tricky because, depending on your partner’s credit history, income and the bank’s assessment of your now financial situation, it’s up to the bank to say yes or no as to whether they’ll allow you to transfer the loan from your current name to both you and your partner’s name. The bank treats this as a brand new application assessing the interest rates as at today. So even if you’ve got years and years of history of being able to make payments on time without missing a beat, the bank is still obligated to reassess your home loan and look at a brand new application.
What Are The Joint Ownership Structures?
So, what type of ownership commitment should you consider? This is definitely where you want to get a lawyer involved. In general, there are two types of ownership that you can consider: joint ownership and tenants in common.
Joint ownership, also known as joint tenancy, refers to two people who equally own a property. If one of those people passes away, the deceased’s share will automatically be passed on to the surviving owner.
Tenants in common refers to the ownership split between two or more individuals. This is where each tenant or owner has an equal or unequal share. The tenants in common structure is more common where you’re not looking at going 50/50. you might have said, “Well, I’ve put in 30% of the deposit, and you’ve put in 70%, so, therefore, I’ll own 30% of the property, and you’ll own 70%.” Under tenants in common, when one of the owners has passed away, the ownership isn’t automatically transferred and will be administered according to the deceased person’s will. Another quick reminder that it’s worth updating your will.
What If I Cannot Get The Loan Updated?
If you’re in the unfortunate situation where the bank refuses to add your partner to your title, there are a few options you can consider.
Binding financial agreement. If you can’t get the loan updated, it could be worth exploring the option of a binding financial agreement. These documents are a way to outline what would happen to the property if the relationship ends. If you’re looking at setting up a binding financial agreement or a trust, you need to speak to a lawyer about the pros and cons of these.
Transferring the property to a trust. In this case, there will be stamp duty implications, so speak to a lawyer about this. Buying in a Trust can change the way a bank will assess your application.
Reassessing things later. If you’re on maternity leave, for example, or carers leave, or you might have had extended time off work, or you might have existing debts you need to clean up, it could just be worth leaving the property as it is now and then revisiting the transfer down the line.
Pros and Cons Of Transferring Your Partner To The Title Of A Property?
As with everything, adding your partner to your property title has upsides and downsides. In this section, we will discuss each of them in detail.
Benefits of shared ownership
There are some major advantages to adding a partner to your property title, especially if you’re both in the relationship for the long haul.
Protection for both parties. If you’re the sole owner and, sadly, something were to happen, your partner could be left with nothing. This is probably a good reminder that it’s worth updating your will after any major events. If you bought a property, sold a property, or assets have changed hands, share ownership through a title provides security for both parties.
Relationship equality. For many people, putting a partner on a title formalizes the commitment. As a couple, it shows the emotional and financial contribution of both partners to your home.
Future financial gains. When it comes time to sell, being on the title means you both potentially share in the profits. How you split up those potential gains is really entirely up to you as a couple. It doesn’t need to be 50/50
What are some downsides of transferring your partner to the title of a property?
So, what are some of the downsides of transferring your partner to the title of a property? It’s not all profit share and good times. There are other things to consider if you’re looking at putting your partner on the title of your property.
Pre-existing debt. If your partner doesn’t have a great credit history or has a bunch of outstanding debts, this could be a problem. As we mentioned earlier, the bank will completely reassess your application based on you both applying in today’s market. With all the interest rate increases and changes in assessment, your borrowing capacity might not be as strong today as it was a few years ago.
Relationship breakups. Listen, you don’t want to get into a relationship expecting to fail, but life happens, and if things turn sour, dividing property is just another messy, emotional and time-consuming activity. There is some legal documentation you put in case to cover yourself on this.
Costs. If you’re looking at transferring the property that you both live in — your principal place of residence- then the good news is that most states have exceptions around stamp duty, so you won’t have to pay stamp duty transfer. Again, get legal advice on this. It depends on state to state and on your situation. If you’re looking at transferring the ownership of an investment property you own, it’s a completely different case. There could be stamp duty; there could even be capital gains tax considerations that you need to think about. If you’re looking to transfer an investment property, it’s definitely worth speaking to an accountant for advice.
What Does Adding a Partner to a Property Title Mean Legally?
Here are the legal aspects to consider if you’re thinking about adding your partner to your property title:
- You both equally own and decide on the property
- You share costs like rates, taxes, insurance and maintenance
- It can affect taxes, future sales, inheritance planning and disputes if you separate
- Most lenders make you refinance when names change, with new loan terms.
- You must get a lawyer or conveyancer involved to handle the paperwork.
Adding Your Partner to the Property Title - Step-by-Step Process
Step 1—Firstly, speak to a lawyer or solicitor
Confirm the fees and charges that apply. Make sure you’re eligible for stamp duty exemptions and that there are no unforeseen costs.
Step 2—Speak with a mortgage broker.
A mortgage broker like Hunter Galloway can check out your financial situation and make sure the bank will allow you to get a loan now that you’re thinking of transferring in joint names.
Step 3 – Refinance Home Loan Into Both Names
Tell your lender you want to add your partner. You will need to consider discharging your current loan and applying for a new one together. Your partner’s finances will impact the new loan.
Step 5 – Submit New Title Ownership Paperwork
After the loan is approved, the solicitor will draw up the transfer of title papers for your state and get it all registered. The lawyer will provide the following documentation:
- Completed property transfer application
- Original title certificate
- Discharged mortgage and new loan papers
Step 6 – It’s all settled!
Your new loan has been set up in joint names, the title transferred, and you and your partner now own the property together!
Key Financial Impacts Of Adding Your Partner To Your Property Title
- Loan eligibility uses both your incomes. Talk to a mortgage broker to learn about the specifics.
- Most states don’t require stamp duty for partner transfers, but conditions sometimes apply.
- Exiting fixed loans early can cost $500-$5000 in fees.
- Refinancing often resets mortgage insurance terms. If your loan-to-value ratio is over 80%, you may be required to pay lenders’ mortgage insurance.
State and Territory Regulations
Rules, paperwork and fees differ across Australian states when adding a partner. Check your area’s specific need-to-knows first:
BONUS: Frequently Asked Questions
If it doesn't work out, can I add a parent or sibling to the title instead of my partner?
The short answer is yes, you can, but lending restrictions will still apply. Also, keep in mind that the stamp duty exemptions will likely not apply because they’re generally only available if you’re a partner or de facto and you’re living together. Exemptions are not available if it’s a brother, sister, or other type of relationship. So keep that in mind; the cost could be a little bit higher if you’re looking at transferring to a parent or sibling.
What if we're not married? Does that matter?
In Australia, marital status doesn’t generally impact property rights. De facto couples have similar legal standings in most situations. Again, this isn’t legal advice, so seek specific legal advice if this is your situation.
My partner has a bad credit score. Are we completely out of options?
Unfortunately, there are no easy fixes to this. If they have old default issues from the past, which could take time to fix, it could be worth speaking to a credit repair agency. We’ve seen defaults get removed many times if they’ve not followed the correct processes, so there are ways to fix that. The credit repair agency can potentially help your partner build their credit score back up so they can get in a position to refinance in a couple of years.
How much is stamp Duty?
Stamp duty exemptions are available if you’re buying with a spouse or de facto partner. The only caveat is that it has to be your principal place of residence, which we mentioned earlier. It’s not available on investment properties. Seek advice on this to triple-check before you start the process.
Next Steps To Adding Your Partner To Your Property Title
Putting a solely owned home into both names makes you both legal owners and cements your financial commitment. Refinancing mortgages often goes along with it. Get tailored legal and financial advice before adding your partner.
At Hunter Galloway, we can help you review your financial situation and ensure you have no unexpected issues with refinancing your home loan. Contact us for a Free Assessment or give us a call on 1300 088 065.
Disclaimer: This article is general in nature and shouldn’t be considered specific advice. If you’re looking at adding your partner to the title, get in touch with our team, and for the legal and taxation side of things, speak to an accountant and lawyer.
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