If you live with your partner, you may be thinking of opening a joint bank account, or you may already have one. There are many benefits to sharing a bank account with your partner or spouse, including:

  • Simplicity: Sharing a bank account can make monthly payments more straightforward and financial planning easier. If you both put the same amount of money in, for instance, 30% of your salaries per month, this can make household finances easier and fairer, and prevent arguments about money.

  • Saving: If you have money left over after monthly payments, you could also create a savings account and use the money towards future expenses, or something nice for the both of you like a vacation.

  • Growth: Since you are both putting money in the joint account, it is likely to grow more quickly than your individual bank accounts.

  • Low mortgage rates: For mortgage loans, interest rates will generally be lower, and loans higher, if borrowed by two people rather than one.

However, a joint bank account also demands a certain amount of trust, communication, and planning between the two parties. Some possible negative effects of a joint bank account include:

  • Trust: By opening a joint bank account with your partner, you are giving them access to your money. While we all want to believe it would never happen, sometimes people can be untrustworthy, depending on circumstances. Before opening a joint bank account you need to be certain that there is trust between both parties.

  • Possible loss: Because of the nature of joint bank accounts, once money is withdrawn from one person without the other’s approval, it can be very difficult for the other person to get the money back.

  • Loan liability: If you have a mortgage or other loan from a joint bank account, then you are both liable for the loan.

  • Credit: The credit rating based on borrowing from the joint account will affect both partners.

When applying for a mortgage, it is easier to get a low mortgage rate, and often you will be more likely to be approved for the loan you want when applying from a joint account. The rising property market in Ontario means that joint accounts can often make it possible for young couples to be approved for a mortgage, and have lower mortgage rates, than if applying from a single account. If you are thinking of applying for a mortgage from a joint account and have any questions or concerns, consult one of our highly experienced mortgage agents today!