Many couples take out a joint debt or loan. As a couple, for example, you might be able to borrow more money. But it’s important to be aware of the risks before you go ahead.
Loans and debt that can be taken out jointly
Several types of credit can be taken out jointly. These include:
- joint bank accounts that have an overdraft facility
- secured loans – such as a mortgage
- unsecured loans – such as a personal loan from a bank or other lender.
If you’re thinking about borrowing money jointly, it’s important that you both make a budget – to ensure you’ll be able to afford the repayments.
Who's liable for joint debt
Top tip
Most joint bank accounts are set up in a way that allows one person to spend money without the other person’s permission. But you can set up an account so that both of you have to agree before any money can be taken from the account.
By signing a credit agreement (a contract) for a loan or overdraft with someone else, you’re each agreeing to pay off the whole amount if the other(s) can’t or won’t pay.
It doesn’t matter who spent the money, or who now owns the item or items you bought with the joint loan or overdraft.
This is called ‘joint and several liability’. This means that you’re both jointly responsible for complying and paying what’s owed.
So if the other person doesn’t pay anything that’s owed, you could end up with debt. For example:
- If your husband, wife or partner dies, you’ll still need to repay any joint mortgage.
- If you and your partner split up, they could still run up a debt on a joint bank account if there’s an overdraft facility – and you would be jointly responsible for paying the overdraft back.
Find out more in our guides Making sure you can afford to borrow and How to deal with problem debt after separation.
Credit cards
In the UK, credit cards can’t be taken out jointly – even if you and your partner each have a card.
Only the main cardholder who signed the credit agreement is responsible for anything that’s borrowed on the card.
The main cardholder might let someone else have a credit card on the same account.
But the secondary cardholder doesn’t have a legal responsibility to make any payments to the credit card company.
Applying to borrow jointly
If you apply for a loan together, the lender will look at both your credit records when assessing affordability. This means you might be more likely to be accepted.
But the loan will also appear on both your credit reports. This means if there are any problems paying it back, such as late or missed payments, both your credit scores will be affected.
This might affect your ability to borrow money in the future. Find out more, including separating yourself financially from someone with a poor credit score, in our section How to improve your credit score.
Acting as a guarantor
If someone – usually a parent – is willing to act as a guarantor for you, this can help you get a loan or a mortgage.
Being a guarantor means you’re responsible for repaying the loan, if the person who took out the loan is unable or won’t.
It’s not something you enter into lightly as there are serious financial risks involved for the person guaranteeing the loan.
If someone – usually a parent – is willing to act as a guarantor for you, this can help you get a loan or a mortgage.
Being a guarantor means you’re responsible for repaying the loan, if the person who took out the loan is unable to or won’t.
But there are serious financial risks involved for the person guaranteeing the loan.
Experian has more information about being a guarantorOpens in a new window
Debt and financial abuse
It’s important to never feel pressured into taking out a loan for, or with, somebody else – especially if you know you can’t afford it.
If your partner or someone else is running up debts in your name, or pressuring you to borrow money, this is financial abuse.
If you’re in this situation, there’s help and support out there. Find out more in our guide Financial abuse: spotting the signs and leaving safely.
