Do You Need a Co-signer or a Guarantor

At some point we all need someone to lean on. For a few mortgage applicants, that someone is a co-signer or guarantor. If you’re expecting to use someone else to help you finance your home it’s important to be aware of the differences between a co-signer and a guarantor so let’s clear those up.

Despite the fact that people often use both terms interchangeably they actually have very different rights and responsibilities attached to them. A co-signer is viewed as a co-owner even though they won’t be the one making the payments. This is because the co-signers name also appears on the title holding them equally accountable. A guarantor, on the other hand, basically acts as the payment enforcer and while they will also be held liable should the applicant default they don’t appear on the title.

You may be asked to use a co-signer in order to cover a gap in income. Remember that your co-signers name will also appear on the title so they will need to sign all of the mortgage documents as well. Their name will remain on the title until you are able to qualify for the mortgage on your own.

Guarantors are called upon when the applicant has a qualifying income along with credit issues. This means that the guarantor’s credit will need to be checked. The lender will also ask this person to disclose their assets, liabilities and income.

If you have any concerns about qualifying for a mortgage please contact yourbank/mortgage broker . I know that adding a co-signer or guarantor to your mortgage isn’t always ideal so let’s see if together they can devise other mortgage strategies to meet your needs.

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