Mortgages are, with a few exceptions, the most common way of financing housing. Not everyone has millions to spare. But how does a mortgage on one spouse work? If you’re thinking about taking out a mortgage and only one of you is considering it, read our article. We’ll explain in detail what a one-spouse mortgage entails, what to look out for and how to decide if this is the right solution for you.
A one-spouse mortgage is a type of mortgage loan where only one spouse (or registered partner) takes out the loan and the other spouse is not involved in the loan relationship at all. This means that only one spouse has any liabilities and obligations to the bank. On the other hand, the ownership interest in the property financed by the mortgage can also be registered only in the name of the person who has taken out the mortgage.
Whether spouses or partners can take out a mortgage in the name of only one of them depends in practice on several factors, in particular the property regime between the spouses, the income situation of both partners and the purpose of the mortgage loan.
There are several situations in which spouses can write a mortgage on only one of them. Here are the most common ones.
If one spouse has an income that is insufficient to qualify for a mortgage loan or if their financial situation is precarious, it may be easier and more efficient to arrange a mortgage in the name of only the other spouse. The low income of one of the applicants could lead to complications for the bank in approving the loan. The better the creditworthiness of the client, the more likely the bank is to grant the mortgage. So if one spouse does not earn or has little income, it may be better to leave him or her out of the mortgage. However, in most cases there is also a “guarantee”.
In some marriages, partners prefer separate ownership of property, whether for personal, legal or financial reasons. Thus, if one spouse wishes to be the sole owner of the property, it is logical that he or she will arrange the mortgage in his or her name only.
If one spouse does not want to be bound by financial obligations, for example because he or she is afraid of not being able to pay them in the future and does not want to expose himself or herself to bankruptcy or foreclosure, then it may also be advantageous for only the other spouse to take out a mortgage. Again, however, without separate assets, this protection is limited.
The aforementioned creditworthiness, i.e. the ability to repay the loan, is a key factor that banks focus on when approving a mortgage. If one spouse has a significantly higher income or a better credit history, a mortgage in his or her name may be more attractive to the bank, which will grant the mortgage on more favourable terms. Again, however, there is a certain amount of co-responsibility to consider.
Do you have questions about a mortgage on one spouse?
Financing a home is not just about numbers – it’s often a major life decision that affects you and your partner. Our legal team offers you a personalised approach and tailor-made solutions. We can offer you an analysis of your situation, property arrangements, protection from risks and support during your divorce.
Even if the mortgage is arranged in the name of only one spouse, the bank still takes into account several important factors.
The first is the income of the applicant. The applicant must provide proof of sufficient income to prove that he or she has enough money to cover the mortgage payments. The bank usually considers not only the income itself, but also the stability of employment and any other financial obligations.
Another factor is the marital community property (PCP). This applies in most marriages and means that assets and liabilities are joint for both spouses. If one spouse wants to arrange a mortgage on his or her own, it is often necessary for the other spouse to sign what is known as a consent to the loan, even if he or she will not be the borrower. This consent confirms that the other spouse is aware of the loan and does not object to it.
We can also mention the so-called separate property. If the spouses have a property arrangement based on separate property (e.g. a pre-nuptial agreement), it may be easier to arrange a mortgage on one spouse. In this case, the other spouse does not have to be involved in the loan or provide consent, nor does he or she have direct liability.
Tip: A mortgage often brings with it a lot of questions. Mortgages come with a lot of questions.
Like most financial products, there are advantages and disadvantages to a one-spouse mortgage. Advantages include:
Disadvantages:
If you decide to take out a mortgage on one spouse, follow these steps:
A mortgage on one spouse can be advantageous during the marriage, but it can easily become a source of problems during a divorce. If you take out a mortgage on only one spouse, the other partner may not be directly responsible for repaying the loan.
However, if the property is community property, legal disputes may arise when the property is divided. Therefore, it is advisable to have the property arrangement already settled before the mortgage is taken out. Just use our legal advice service, we can help you with everything.
Tip: Also, gifting property can be a more complex legal topic that you can’t do without the help of professionals. Read on to find out what gifting property involves and how to go about it.
If you find that a one-spouse mortgage is not ideal for you, you can consider one of the following alternatives when buying a new home.
A mortgage to one spouse may be a practical solution in certain situations, but requires careful consideration of the legal and financial implications. If in doubt, consult your bank, lawyer or financial advisor about your situation. It is always important to ensure that the mortgage fits your needs and long-term plans. In any case, also communicate openly with your partner and clearly define the rules that you both consider fair and workable. This will not only give you a mortgage, but also peace of mind on the road to your dream home.
A mortgage on one spouse may be a good solution in situations where one partner has a higher income, better credit rating or wants to be the sole owner of the property. This type of mortgage loan has advantages such as easier loan approval and separation of liabilities, but it also has disadvantages such as a lower maximum loan amount and potential complications in a divorce. Banks take into account the applicant’s income, the property arrangement between the spouses and the consent of the other partner, if any, when approving. If a mortgage on one spouse is not ideal, there are alternatives such as a joint mortgage, a guarantee on other assets or a consumer loan.
Our team of experienced attorneys will help you solve any legal issue. Within 24 hours we’ll evaluate your situation and suggest a step-by-step solution, including all costs. The price for this proposal is only CZK 690, and this is refunded to you when you order service from us.
Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.
In person and online. Just choose the appropriate service or opt for an independent consultation when you are unsure.
