Several different types of loans and debt can be taken out jointly, including:
- Secured loans – such as a mortgage
- Unsecured loans – such as a personal loan from a bank or other lender, and
- Joint bank accounts where there’s an overdraft facility
Joint and several liability explained
You might think that when you take out a joint loan or debt with someone else that you're only responsible for your 'half' or share, but that’s not the case. By signing a credit agreement (a contract) for a loan or overdraft with someone else, you're each agreeing to pay off the whole debt if the other(s) can't – or won't pay.
This is 'joint and several liability'.
It doesn't matter who spent the money, or who now owns the item or items you bought with the joint loan or overdraft.
It also doesn't make a difference whether you're married, in a civil partnership or even if you're not in a relationship at all. For example:
- If your husband, wife or partner dies, you will still need to repay any joint mortgage.
- If you break up with your boyfriend or girlfriend, they could still run up a debt on a joint bank account if there's an overdraft facility and leave you with the total bill
In other words, any joint debts mean joint responsibility and liability. So if the other person doesn't pay up, you could end up with a lot of debt on your hands.
What about credit cards - can they be taken out jointly?
In the UK, credit cards can't be taken out jointly, even if you and your partner each has a card. There's always one person – the main cardholder – who's signed the agreement. This means they are responsible for paying off the debt in full.
But the main cardholder might let someone else have a credit card on the same account. This secondary cardholder doesn’t have legal responsibility to make any payments to the credit card company.
Can a joint application improve your chances of getting credit?
Applying jointly for a loan can sometimes increase your chances of getting credit. However, you should definitely avoid applying together if one of you has a poor credit rating.
Once you have a joint debt with someone else, your credit file will be linked to theirs. This means that if you want to apply for a loan in your own name in the future, the lender would be able to see the other person’s credit history and take that into account as well as your own.
It's a good idea for both of you to check your credit rating before taking out any joint credit – see How to check your credit report.