Banks distinguish between two types of borrowers who can take, for example, a mortgage together. These are marriages covered by the property community, and couples (marriages covered by interfaith, life partners and even unrelated persons) who do not build joint property.
Property separation and credit
If a couple with a property community buys an apartment on credit , each of the spouses becomes the owner of half of the property and half of the liability towards the bank. The couple is jointly and severally liable for repayment of the debt incurred.
If people applying for a loan jointly have property separation (or simply live in an informal relationship), then they can shape the provisions of the contract to a much greater extent , e.g. divide assets and debt differently than equally. In a sense, the bank treats them as a company, not as a marriage.
When is it worth deciding on property separation?
Separation of assets is essential if, for some reason, you do not want to be limited in important financial decisions. Separation is also recommended if you want to protect money from the effects of unsuccessful investments or unsuccessful projects. Only with the separation of property will a husband or wife not be liable with their property for the repayment of personal obligations of the second half.
The property community and the spouse’s consent to the loan
It is worth remembering that the property community gives spouses the opportunity to conclude smaller loan agreements individually (e.g. consumer loans or payday loans) without the partner’s knowledge and consent. This is, moreover, one of the reasons why couples, in which one of the people is known for irresponsible use of financial services, decide on the separation of property. They do not want to bear the consequences of the spouse’s recklessness (e.g. having to pay back arrears or entering in the register of debtors).
How does asset separation affect creditworthiness?
Does therefore property separation have any effect on creditworthiness? Can have. An example is the situation when – thanks to the separation of property – one of the spouses manages to avoid liability for the spouse’s errors, including the burden on their own creditworthiness, income and assets. A married person who has a “clean account” still remains a reliable customer for the bank.
In the case of mortgage loans, asset separation is a neutral signal for the bank. The key to calculating creditworthiness will be how much your spouse earn, what other obligations they have, and how many people they support. The advantage will be, for example, the fact that both husband and wife earn, or that they do not have debts, including past due, in other financial institutions.
Whether the couple has a community or property separation will affect the way the bank constructs the loan agreement, but – under the normal scenario – will not directly affect the pair’s ability to take out a loan.
Mortgage loan with property separation
To sum up, when it comes to large loans (e.g. mortgages), banks have the tools to effectively handle marriages with a property community and with property separation. These arrangements between spouses will not directly affect the couple’s creditworthiness.
Property separation can be a practical tool to protect your personal creditworthiness from the consequences of financial errors of the second half. This applies especially to smaller loans, which can be taken without the knowledge and consent of your spouse or the effects of business failures.