Time to read : 5 Minutes
Let’s say… you’ve financially contributed to a property, but your name isn’t on the title, where would you stand?
There are more Aussies than you would think with these sorts of informal arrangements – especially with family – where they help fund a property but don’t have official ownership. Years later, they may want to “fix” that situation by adding their name to the title or mortgage.
But can you actually do that… and how do you know if it’s the right decision for you?
Adding a name to a property title or mortgage could provide you with security and recognition for your contributions. But at the same time, there are:
legal implications
tax considerations
risks.
Let’s take a look at what’s involved in adding someone’s name to a property title or mortgage.
Eddie’s all-too-familiar story
Eddie, a retiree in his 70s, gave his son $70,000 years ago to help him buy a home. He also chipped in $30,000 for renovations. Eddie lives in the house by himself and pays a reduced rent, which also helps his son with the mortgage repayments.
The dilemma Eddie has is that there was no written agreement. The property and mortgage are in his son’s name alone.
Eddie doesn’t own a property and relies on the Age Pension, so he’s decided he wants to be officially recognised for his financial contributions by adding his name to the property title.
Eddie’s story is common. Financial support is often given informally through verbal agreements made with the best intentions. But down the track, without a name on the title, it can leave financial contributors like Eddie feeling vulnerable.
Why would you want to add a name to the title, years later?
Adding a name to a property title is a personal choice, but here are some reasons for retrospectively doing it:
to acknowledge previously made financial contributions such as loans, gifts or renovation costs
for housing security later on in life
to legally show joint ownership with the other person
to tap into property equity
for wills or estate planning
to safeguard against potential conflicts or disputes.
For Eddie, he has already pumped $100,000 of his own money into the property and pays rent to help his son pay off the mortgage, so he’s seeking financial security for his twilight years. But all of the above could apply to Eddie.
Note: whatever your reason, before making a decision, weigh the benefits against the potential costs. Always talk to a finance professional if you need help.
How property ownership impacts mortgage responsibility
Let’s get one thing straight: property ownership boils down to who is listed on the title. So if you’re helping to pay bills or the loan, but your name is not on the title, you don’t own the property.
The other consideration is how the names are listed:
Joint tenants: all owners have equal shares and rights. If one owner dies, their share automatically passes to the other. This is ‘right of survivorship’.
Tenants in common: owners can have unequal shares. If one dies, their share can be left to someone else via a will.
Legal issues can pop up when title and mortgage names don’t match. For example, if two people are on the title but only one is listed on the mortgage. In this case only the mortgage holder is legally liable to pay the loan.
For Eddie, he’s not listed on the title or the mortgage, so legally he’s not responsible for the mortgage and doesn’t own the property, despite all his contributions.
So can you add a name to a property title?
Yes, but it’s not a quick and easy process. It’s also a little different depending on the state or territory your property is located in. For example, in NSW you need to complete the transfer form and may have to pay a lodgement fee.
Be aware: transferring ownership to someone other than a spouse could trigger extra costs such as Capital Gains Tax (CGT) and stamp duty. Always talk to an accountant before changing any names on a property title.
What about adding a name to the mortgage?
If you want to add someone to the mortgage, most lenders require you to refinance. This also means that a full assessment will be needed for the ‘new’ borrower’s finances. It can impact the interest rate, fees and the loan structure.
Yes but… refinancing could be a good opportunity to get a better mortgage rate and unlock equity from the property, which could then be put into super or invested somewhere else.
A good mortgage broker can help you navigate refinancing the mortgage, or speak to a financial adviser about investment options.
What are the consequences?
Adding your name to a title or mortgage could provide:
legal recognition
greater financial security
access to accrued equity.
But it may also mean:
being responsible for the mortgage and property costs
incurring other expenses such as Capital Gains Tax or stamp duty
impacts to your Age Pension.
💡 If you put your savings into a home that becomes your primary residence, it’ll be exempt from the means test for the Age Pension, so there may be no impact to your pension payment. But the trade-off means that you could miss out on interest or dividends you may have earned on that money elsewhere. Talk to a financial expert to see what this means for you.
Your 4-step action plan if you want to go ahead
If you're seriously considering adding a name to a property title or mortgage – yours or someone else’s – here are four steps to take.
1. Have a conversation Openly discuss intentions, concerns and expectations with the other person involved. For example, is this about financial recognition, long-term security or both? If you can’t come to an agreement or you want some independent advice, talk to an expert.
2. Get independent advice You don’t know what you don’t know. Each person should speak to a financial adviser, accountant or property lawyer to get independent advice. Remember not to rely on verbal agreements or assumptions.
3. Get it in writing Once you come to an agreement, document it. This is the best way to protect your interests in case things go pear-shaped in the future.
4. Update estate plans Finally update wills and estate plans to reflect any changes to ownership. This can help stamp out any disputes down the track.
💡If you can’t afford professional advice, there are free resources available including the National Debt Helpline and Legal Aid.
Bottom line
Owning property can help provide security and give peace of mind, especially in retirement. But adding or changing names on a property’s title is a big decision – it affects your legal rights, finances and relationships.
Before making any changes, make sure everyone understands the potential impacts. Having open conversations and planning carefully will help you protect what matters most – keeping your finances and relationships on solid ground.
Go deeper:
Can giving one child an early inheritance be handled in a fair way?
Are there tax implications for transferring assets from one generation to another?
Disclaimer
The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754.
