Joint Tenancies and Credit Affordability

seanjc89

Hi All,

I recently applied for a personal loan from my bank and was declined based on affordability. I asked to examine the decision in branch as based on my calculations I felt I should have been fine on this front. It turns out that as I have a joint tenancy agreement, they have to take into account the entire amount of rent rather than just my own share. Living in London, the total value of mine and my housemates rent is almost the full amount of my basic net income so its unsurprising that I was failed on affordability.

My question is, do all lenders use this approach? If this is the case I can't imagine how anyone in a joint tenancy ever gets approved for any credit products!

Thanks in advance.

National_Debtline

Hi Seanjc89 and welcome to MSE,


I can't say if all lenders use this approach, but I can see the justification for it. A joint tenancy creates joint and several liability, so you are each responsible for 100% of the rent separately and together. So, whilst you are together it is shared, but if your housemate left, then you would have to pay it all on your own.


You should try and get some financial advice about what you are trying to purchase/ do with the money, and if there may be an alternative type of finance that may be better for you, (rather than a loan). Try www.moneysadviceservice.org


Laura
@natdebtline