You’ve Got an STD!
That was the awkward sentence I had to deliver to a client last week.
And no, not the nasty medical kind – I’m talking about Sexually Transmitted Debt.
I was helping a de facto couple who’d been referred to us for some strategic advice.
Financially, they ran completely separate lives.
She had a squeaky clean credit record and healthy savings sitting in the offset account. Him… Not so much. He had a personal loan and some other consumer debt – basically, he’d been sticking his credit profile in everything.
She couldn’t understand how his debts were reducing their borrowing power.
But here’s the thing: when you own property together and apply for a loan jointly, the bank looks at both your financial situations collectively, not as individuals.
How Lenders See Joint Applications
When you apply for credit together, lenders assess your combined financial picture:
- Combined income (the good bit)
- Combined expenses (including both of your debt repayments)
- Combined credit history (where things get messy)
His personal loan and credit card repayments meant part of their household income was already committed before the bank even considered their home loan. Their joint borrowing capacity shrank significantly.
The bank doesn’t care that she’d never touched his credit card. In their eyes, his debt reduces what the couple can borrow together.
The Uncomfortable Truth
When you link your lives through marriage, de facto relationships, or joint property ownership, you also link your finances in the eyes of lenders.
Your partner’s debt becomes your problem the moment you apply for credit together. Their credit card debt, personal loans, or missed payments can significantly reduce your joint borrowing capacity.
The Good News: STD is Curable
The solution involves cleaning up the problematic debt before applying for joint credit. There are strategies to tackle this systematically while still maintaining separate day-to-day finances if that’s what works for your relationship.
Here’s how to tackle it:
- Attack high-interest debt first: Credit cards and personal loans are wealth killers. Pay these off before worrying about car loans or other lower-rate debt.
- Use existing assets strategically: Offset account savings or redraw facilities on existing loans can often clear bad debt faster than making minimum payments.
- Consolidate where it makes sense: Sometimes rolling multiple debts into one lower-rate loan simplifies repayments and reduces interest.
- Clean up credit history: Pay any overdue amounts, close unused credit cards, and give your credit score time to recover before applying jointly.
- Set up a debt elimination system: Automate extra payments so you’re not relying on willpower to make progress.
It takes some planning and uncomfortable conversations, but it’s completely doable.
Prevention is Better Than Cure
If you’re moving in together or considering joint property ownership, have the money talk before you sign anything:
- What debts do you currently have?
- Any defaults or missed payments?
- How will you handle joint expenses?
- What’s the plan for existing debts?
The Bottom Line
Your partner’s debt becomes your problem the moment you apply for credit together. But STD is completely preventable and curable with the right strategy and some uncomfortable but necessary conversations.
Before you apply for that mortgage together, have the money talk. Because the only thing worse than an awkward conversation now is an STD you can’t cure later.
Stay Beautiful!
John Manserra
Certified Financial Planner®, Director
Apex Advice – Geelong Financial Advisers and mortgage brokers for professionals and tradies who want to make work a choice before you’re 67. Book a 15 minute chat here.
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Important:
This is not tax advice. The information contained in this update has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs.
You should seek advice before making any decision regarding any information, strategies or products mentioned to consider whether that is appropriate to your own objectives, financial situation and needs.
Current at 26 August 2025