Co-Signing A Mortgage

Jackie Woodward
Mortgage Broker.TMG
780.433.8412
info@mortgagegirl.ca
CO-SIGNING A
MORTGAGE

Whether you are the borrower who needs a co-signer or
someone has asked you to co-sign for them in securing
a mortgage approval, you should fully understand all
of the implications involved before you commit.
The mortgage landscape has changed a lot over the
last couple of years and as a number of new mortgage
rules have come into effect it’s not as easy to qualify
for a mortgage as it was 5-years ago.
CO-SIGNING A MORTGAGE
Jackie Woodward // Mortgage Broker // TMG // 780.433.8412 // info@mortgagegirl.ca

As a result of these changes I have seen an
increase in co-signers required so this week I
want to cover the 5 “must knows” about co-
signing for a mortgage.

Jackie Woodward
Mortgage Broker.TMG
780.433.8412
WHAT IS A
CO-SIGNER?

If a borrower has weak credit or their income does not
support the mortgage amount they have applied for, a
co-signer may be requested.
A co-signer is an additional borrower put onto the
mortgage application in order to add strength to the
approval of the mortgage financing.
The idea being, the stronger the application, the more
appealing it is for a potential lender to approve the
financing.
WHAT IS A CO-SIGNER?

You can have more than one co-signer on an
application, an example of this is two parents co-
signing for their child who is buying their first home.
Keep in mind the purpose of a co-signer is to improve
the odds of a mortgage approval, so a weak borrower
would not make a good co-signer in this situation.
In addition to a co-signer going on the mortgage (the
debt) they will also go on the accompanying property
land title (the asset).
WHAT IS A CO-SIGNER?

Jackie Woodward
Mortgage Broker.TMG
780.433.8412
WHAT IS A
STRONG
CO-SIGNER?

The financial profile of a suitable co-signer will be
dependent on why a co-signer is required.
If the main borrowers credit is weak, the lender
will be looking for a co-signer who has a strong
credit history though if the primary borrowers
qualifying income is hard to prove, the co-signer
will have to have a strong reliable income source
with minimal debt.
WHAT IS A STRONG CO-SIGNER?

A suitable co-signer has to look good
where the main borrower doesn’t.
WHAT IS A STRONG CO-SIGNER?

Jackie Woodward
Mortgage Broker.TMG
780.433.8412
WHAT IS THE
DIFFERENCE
BETWEEN A
CO-SIGNOR AND
GUARANTOR?

A few notable mortgage terms to
differentiate between are a co-borrower,
co-signer, and guarantor.
WHAT IS THE DIFFERENCE BETWEEN A
CO-SIGNOR AND GUARANTOR?

A co-borrower is just another applicant,
such as the spouse or siblings buying a
house together. All borrowers are
qualifying together and all will likely
owner occupy the subject property.

Whereas a co-signer is usually brought on
to add strength to a mortgage application
where the main borrower lacks and it’s
not unusual for the co-signer to owner
occupy a different property.

A guarantor is not as common as a co-
signer as future liabilities and
implications for a guarantor can be quite
different than that of a co-signer
depending on the specific transaction.

A guarantor would personally guarantee
the mortgage repayment in the event the
primary borrower does not pay.

A notable difference with a guarantor is
that a guarantor will only go on the
mortgage (the debt) and not on the title of
the property (asset).

Jackie Woodward
Mortgage Broker.TMG
780.433.8412
HOW IS THE
CO-SIGNOR
AFFECTED

As a co-signer on a mortgage, you are now 100%
responsible for that debt even if the primary borrower
makes all of the payments from their own bank
account.
In the case of a mortgage loan, this not only applies
to the principle and interest payments, but also to the
property taxes and condo fees if applicable.
Basically, if the primary borrower doesn’t pay, the
lender will be calling you to make the payments.
HOW IS THE CO-SIGNOR AFFECTED

Further to that, the lender often doesn’t notify you,
the co-signer, of any delinquent payments until the
loan is already significantly behind and has already
negatively affected your credit rating which could
affect your future borrowing potential.
Make sure you are receiving regular statements
during the mortgage term to ensure payments are
up to date.

The co-signer also needs to be aware ALL of the
costs associated with this new home as you will
now have to disclose on any future credit
applications you enter into.
This can impact how much you can borrow in
the future.

Jackie Woodward
Mortgage Broker.TMG
780.433.8412
REMOVING A
CO-SIGNOR

The primary borrower cannot make any changes to
the mortgage without the consent of the co-signer.
When you are ready to remove your co-signer, you
need to contact the lender to determine what their
procedures are, or you can prepare by asking the
question upfront.
REMOVING A CO-SIGNOR

If your intention was to only have the co-signer on the
mortgage and the land title for a short period of time,
you may want to initially choose to go with the lender
who has policies and procedures that are going to
work for all.
Ideally, if you got a great rate for a 5 year closed fixed
term, and believe you will qualify on your own without
the co-signer after the first year, you would want to
work with a lender who will change the ownership of
the home without having to break the mortgage term.
REMOVING A CO-SIGNOR

May 30, 2014 brought a major change to the co-
signing rules of a CMHC insured mortgage; it states an
individual can no longer be a co-signer on a new CMHC
mortgage if they already have a CMHC insured
mortgage.
This is a pretty significant change though the good
news is there are still two other insurer options
available in Canada, Genworth and Canada Guaranty in
addition to a number of uninsured options.

If you’ve been declined for a mortgage and require a
co-signer, talk with your favorite mortgage
professional about what the lender will be looking for
in order to grant financing approval.
If a co-signer is not an option for you, discuss a plan of
action for you to get your financial profile to a level
that lenders will like sometime in the future..

MORTGAGE QUESTIONS?
LET’S CHAT!
JACKIE WOODWARD
MORTGAGE BROKER, TMG
PHONE: 780.433.8412
EMAIL: INFO@MORTGAGEGIRL.CA
FOLLOW @MORTGAGEGIRLCA

Co-Signing A Mortgage

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Co-Signing A Mortgage