Does Your Marriage Contract Influence Your Bond Application?
- Community of Property: All assets and liabilities are shared equally between spouses.
- Antenuptial Contract (ANC) without Accrual: Each spouse's estate remains separate.
- Antenuptial Contract with Accrual: Assets accumulated during the marriage are shared equitably, while pre-marital assets remain separate.
These contracts influence financial responsibilities and bond applications. For example, in a community of property, both spouses are liable for each other's debts, which can affect bond approval if one spouse has a poor credit history. Conversely, an ANC without accrual protects individual assets from being used to settle the other's debts.
Impact on Bond Application
Combined Income: When applying for a joint bond, the combined income of both spouses is considered, which can enhance approval chances. Lenders prefer higher combined incomes as it poses a lower risk.
Debt and Asset Sharing: In community of property marriages, both assets and debts are shared, impacting bond approvals if one spouse has significant debt or poor credit. Changes to the marriage contract can affect creditor rights and bond terms.
Credit Scores and Risk Assessment: Marital status doesn't directly alter individual credit scores, but lenders consider the combined financial behaviour and liabilities of both spouses. Joint bond applications evaluate both credit scores, influencing interest rates and approval chances.
Tips and Best Practices
- Understand Your Marriage Contract Type: Knowing the specifics of your contract is crucial as it affects financial obligations and assets considered during a bond application.
- Consult with a Legal Expert: Seek advice from a family lawyer or legal expert to understand how your marriage contract impacts your bond application.
- Prepare Comprehensive Financial Documentation: Have all necessary financial documents ready to streamline the application process and improve approval chances.
- Communicate with Your Bond Originator or Bank: Clearly inform your lender about your marital status and contract type for accurate risk assessment.
- Plan for Potential Scenarios: Consider how different scenarios, like one spouse having significant debts, could impact your bond application and financial stability.
Marriage contracts do influence the bond application process by affecting financial responsibilities, debt sharing, and asset distribution. Understanding these implications helps couples make informed financial decisions and improves their chances of securing a bond.
De Lucia Group has been servicing the property industry for over 45 years. Contact us to ensure you get the best advice for all your property-related queries. Michael De Lucia - michaeldl@delucia.co.za
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The information contained herein is not intended to constitute advice and shall only be relied upon by you at your own risk. De Lucia Group does not guarantee the accuracy or completeness of any information posted in this newsletter or otherwise. Any information relied upon by you should be independently verified for accuracy. De Lucia Group reserves the right to change the content distributed or published without prior notice.
22 Jul 2024
Author De Lucia Group