Co-signer vs. Guarantor

When getting a mortgage you may be asked from either the lender or mortgage insurer to include a co-signer or guarantor.

Both have the same obligation to pay another person's mortgage if the primary applicant(s) fail to do so. However a co-signer will be put on the mortgage and also on title to the property, where as a guarantor will be put on the mortgage but not on title.

The reasons you may need a co-signer or guarantor:

-          bruised credit or lack of credit

-          income qualification

-          job stability

-          to add strength to the deal

If you are required to add a co-signer or guarantor they will need to have a full credit application taken and also provide supporting documentation. Some lenders don’t allow guarantors so the only option may to be to add a co-signer.

When that time comes to remove the co-signer or guarantor, you will need to do a full credit application with your lender. If you qualify on your own then the lender will move the mortgage into your name. If you had a co-signer then you will also need to visit a lawyer to have your co-signer removed from title. If you had a guarantor you will just need to take their name off of the mortgage. Your mortgage broker will counsel you on what to do in order to remove the guarantor or co-signer.

If you have any questions please do not hesitate to contact us.