What is the difference between a Co-signer and a Guarantor?

People often use the terms guarantor and co-signer interchangeably, but they have very different responsibilities and rights. A co-signer is basically a co-owner and he or she is registered on the title and is equally accountable for mortgage payments.

A guarantor, on the other hand, personally guarantees mortgage payments will be made if the original applicant defaults, but has no claim to the property because he or she is not on title. It's a huge responsibility for Guarantors who have the obligations of the mortgage but don't have any claim to the property.

Lenders require co-signers and guarantors usually due to poor credit, insufficient employment history, inadequate down payment or questionable income.

Sometimes, if one spouse is an entrepreneur and does not want to risk losing the house should the business go bankrupt in the future, they can simply become a guarantor on the mortgage and keep themselves off title.

After a period of time, a guarantor or co-signor can be removed off title should the owners of the property be able to qualify on their own. But a lawyer will need to be used to remove the guarantor or co-signor off title.

Before you co-sign or guarantee a mortgage read the document carefully and know your rights.

Always be informed…

For more information contact your Toronto Mortgage Broker 

at 416-920-9931

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