A “guarantor” is someone who guarantees the repayment of a borrower’s mortgage if that borrower is unable to repay the loan.

Typically, a guarantor is used in situations where the buyer lacks sufficient income to qualify for the value of the loan.  Adding a guarantor can help secure an approval as this lowers the lender’s loan risk.

A guarantor is not the same as a co-signer.

Below are some key facts about guarantors and what makes them different from co-signers:

• The guarantor must be a spouse or immediate family member. This is not necessary for a co-signer, who may be a friend or distant family member.
• A guarantor typically does not have their name on the title of the property but their name will appear on the mortgage. In the case of a co-signer, the name is typically on both the title of the property and the loan.
• Guarantors’ borrowing power for their own loans can be affected by the other loans they are responsible for as a guarantor.
• Like the borrower, the guarantor is responsible for the entire amount of the loan.  In order to qualify, the guarantor must meet the credit, income, liabilities and sometimes assets requirements.  Any potential guarantor should seek legal advice before signing for the loan to ensure they understand the contract.

Whether you want to be a guarantor for someone else’s mortgage, or you need one for your own, be sure to contact me before making any decisions. I am here to help.

Adapted from DLC Marketing