My thanks go to Susan Cowling of Dominion Lending Centres this month for her Guest Blog, on things to consider when deciding to Co-Sign for Loan or Mortgage.
Co-signing on a loan may seem like an easy way to help a loved one (child, family member, friend, etc.) live out their dream of owning a home. In today’s market conditions, a co-signor can offer a solution to overcome the high market prices and stress testing measure. For example, if you have a damaged credit score, not enough income, or another reason that a lender will not approve the mortgage loan, a co-signor addition on the loan can satisfy the lender's needs and lessen the risk associated with the loan. However, as a co-signor there are considerations.
1. If you act as a co-signor or guarantor, you are entrusting your entire credit history to the borrowers. What this means is that late payments on the loan will not only hurt them, but it will also impact you.
2. Understand your current situations—taxes, legal,...