Guarantor versus Co-Signing: What’s the Difference?

Guarantor versus Co-Signing:  What’s the Difference?

Securing a mortgage in today’s market can be more complex than it used to be. With interest rate increases and rising purchase prices, getting a mortgage can present some obstacles to overcome. Even with a stable salary and good standing credit, some clients still need to engage a guarantor or a co-signer to get pre-approved and qualify to purchase a home.

If you find yourself in this position, what do you do? Is a guarantor or a co-signer the right move for you? Let’s explore.

What is a Guarantor and how do they help?

A guarantor helps a future homeowner secure a mortgage, but they DO NOT have a legal claim to the property as their name will not be on the title. It is important to note that each lender can have their own rules around how they approach a guarantor and how they qualify for a guarantor. A guarantor will likely not live on the property and will likely not pay the mortgage payments – at least not intentionally.

What is a Co-Signer and how do they help?

A co-signer will sign the mortgage papers with the homeowner, effectively co-owning the home. A co-signer will be held accountable for the monthly mortgage payments. A co-signer may or may not be living on the property and paying all or some of the mortgage payments and/or the property maintenance. A co-signer is responsible for the property and the debt, which will be reflected on their credit.

What’s Right For You?

Applicants can often pay for the mortgage payments and maintain the property but may need income support to qualify for the mortgage. There is nothing wrong with this! It is a great way to get to the end goal.

If you need help figuring out if a guarantor or a co-signer is the right route, let’s chat – I can’t wait to connect!

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