How your marriage contract influences your bond application | SA Home Loans

04 Dec 2023

How Your Marriage Contract Influences Your Bond Application

Marriage is an established social tradition that can alter your life and the lifestyle you end up living. It can impact the latter by affecting your legal status — changing everything from your title within documentation to the permissions required from you and your spouse when entering into contracts going forward.

Your marital status matters, as there's a chance you're going to tie the knot some day. While South Africa's marriage rate has declined over the past decade, 2021 still saw over 106 000 civil marriages and over 2000 customary marriages registered, with the average person marrying in their thirties and over 80% of marriages being the couple's first union. At the same time, not all marriages last, with four out of ten marriages ending in divorce before their 10 year anniversary.

This means that there's a chance you might begin or end a marriage while navigating the home ownership process, and that your status (whether you're entering into, involved in, or ending a customary or civil marriage) will have repercussions on your ability to purchase a home or finance the purchase.

Before you apply for a bond, here's what you should know.

How different marriage contracts impact your status

Whether your marriage ceremony involves walking down an aisle, paying lobola or breaking glass, you'll need to have the relationship recognised by South Africa's Department of Home Affairs. This will ensure the marriage complies with any legal requirements or ante-nuptial contracts applicable, whether it's a civil marriage, a customary marriage, or a marriage under civil union as a same sex couple.

There are three types of marriage contracts you can enter into that will affect your bond applications and subsequent property purchases or sales. The first is marriage in community of property. This default option sees the couple merging their existing assets, with any major purchases made after marriage requiring both parties' consent. Should you decide to buy or sell a house purchased during this time, you'll need permission from your spouse. The only exclusion would be property you individually have inherited or will inherit that comes with legal stipulations preventing you from sharing ownership with another person.

The second type of marriage contract you can enter into is outside of community's property. This requires you to sign an ante-nuptial contract to protect your existing assets and takes place without accrual, which means that the individual assets and purchases you individually acquire going forward remain separate.

The final type of contract you can enter into is outside of community of property but with accrual. This will see all assets you both purchase after marriage considered joint purchases with joint ownership unless explicitly excluded, with all assets accrued during marriage being split equally should the marriage end.

If you married under customary law in an African or Muslim ceremony, you could be able to put an ante-nuptial contract in place depending on if you were married before or after the Recognition of Customary Marriages Act 120 of 1998 came into effect in 2000. If you got married under customary law after this date or got married outside of South Africa, this could also impact your property ownership status. When in doubt, it's always best to check your contract or certificate for clarity.

How different marriage contracts impact your status

To better understand which option would best suit your situation, the following questions can provide you with more clarity.

  • Do i want to go 50/50 on everything?

A marriage can evolve over time. While you can start the relationship with both parties working and earning a similar salary, one partner might experience unexpected salary increases or decreases over time. If you start a family,one person may need to stop working altogether or cut back on their working hours for several years. When this happens, their financial contributions can decrease, even though they contribute to the household in other ways. If you marry in community of property, you should be prepared for them to have legal ownership of your home, even if, strictly speaking, they didn't pay for 50% of it.

  • Do I have pre-existing assets?

A person can come into wealth that they've earned through an independent investment in the form of property. They can also inherit property upon the passing of a family member, with the intention of passing it down to subsequent generations. If this applies to you, marriage outside of community of property may be a better idea. It will ensure that your assets remain your own, which can be especially important in blended family situations where you or your spouse have children from previous relationships. Getting married with accrual can ensure any property you and your spouse purchase is jointly divided between you two should the relationship end, without compromising pre-existing assets you've earmarked for your biological children.

How marriage affects your credit score

If you want to buy property with your spouse in a joint decision, your bond application will consider you as co-owners in a single application. This means they'll assess your joint financial background and wealth when it comes to your loan approval, interest rate and repayment terms. While many complex factors can impact how lenders make this decision, your individual credit scores can impact your risk. There's no single perfect score to work towards, but you should be aware that a major discrepancy between your credit score and your partners could raise flags with your application, causing delays or even rejections. Knowing the status of both your credit profiles before applying for a bond can help you better prepare your approach.

Getting married should be one of the happiest days of your life and so should the day that you purchase your first home, no matter what the nature of your marital contract is. To keep the process as streamlined and stress-free as possible, SA Home Loans can help you prepare for a bond application and navigate the home ownership process. To get in touch with our team, call 0860 2 4 6 8 10 today.

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