Real Estate

Co signer vs guarantor

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  • Sep 14th, 2017 5:46 pm
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[OP]
Sr. Member
Feb 16, 2013
521 posts
567 upvotes
Toronto

Co signer vs guarantor

Hi guys.
Here is the situation.
Mortgagee wishes to take out 200k mortgage. Mortgagee has several real estate assets but no income.
A willing co signor or guarantor has good income but no assets. The co signor does not want a claim or interest in the property that needs the mortgage.

How best to structure this?
12 replies
Newbie
Jun 8, 2009
86 posts
15 upvotes
Toronto
cowbunpants wrote:
Sep 13th, 2017 1:19 pm
Hi guys.
Here is the situation.
Mortgagee wishes to take out 200k mortgage. Mortgagee has several real estate assets but no income.
A willing co signor or guarantor has good income but no assets. The co signor does not want a claim or interest in the property that needs the mortgage.

How best to structure this?
A cosigner is used to support income, but he becomes co-owner (gets on title).
Deal Addict
Feb 2, 2014
4117 posts
821 upvotes
Toronto
cowbunpants wrote:
Sep 13th, 2017 1:19 pm
Hi guys.
Here is the situation.
Mortgagee wishes to take out 200k mortgage. Mortgagee has several real estate assets but no income.
A willing co signor or guarantor has good income but no assets. The co signor does not want a claim or interest in the property that needs the mortgage.

How best to structure this?
Lenders will not allow anybody to be a guarantor. If the guarantor is a parent, then perhaps. If the guarantor is a spouse that lives in the property, then perhaps. If not, then they have to be a co-applicant and go on title.

Case by case OP.
Kevin Somnauth, CFA
Mortgage Agent and Real Estate Sales Representative
[OP]
Sr. Member
Feb 16, 2013
521 posts
567 upvotes
Toronto
CdnRealEstateGuy wrote:
Sep 13th, 2017 6:12 pm
Lenders will not allow anybody to be a guarantor. If the guarantor is a parent, then perhaps. If the guarantor is a spouse that lives in the property, then perhaps. If not, then they have to be a co-applicant and go on title.

Case by case OP.
Thank you.
Perfect answer.
[OP]
Sr. Member
Feb 16, 2013
521 posts
567 upvotes
Toronto
How much does it cost to remove yourself from title once mortgage is paid off?
Newbie
May 8, 2014
92 posts
41 upvotes
Toronto, ON
cowbunpants wrote:
Sep 13th, 2017 1:19 pm

Mortgagee wishes to take out 200k mortgage. Mortgagee has several real estate assets but no income.
Just for the sake of clarity:

Mortgagor = the person mortgaging their property
Mortgagee = the entity providing the loan
A semi-competent prole, having worked in mortgages at a "Big Bank" for a day or two.
Member
May 9, 2017
361 posts
391 upvotes
CdnRealEstateGuy wrote:
Sep 13th, 2017 6:12 pm
Lenders will not allow anybody to be a guarantor. If the guarantor is a parent, then perhaps. If the guarantor is a spouse that lives in the property, then perhaps. If not, then they have to be a co-applicant and go on title.

Case by case OP.
Hi Kevin,

Why to lender's care who the guarantor is?

Thanks
Deal Addict
User avatar
Dec 27, 2009
3440 posts
1358 upvotes
Ottawa, ON
cowbunpants wrote:
Sep 13th, 2017 1:19 pm
Hi guys.
Here is the situation.
Mortgagee wishes to take out 200k mortgage. Mortgagee has several real estate assets but no income.
A willing co signor or guarantor has good income but no assets. The co signor does not want a claim or interest in the property that needs the mortgage.

How best to structure this?
The co-signor would have to be an absolute idiot to sign up to being responsible for a mortgage (in case of default) without any claim on the title - and I don't think that it can be done anyways (luckily, since I guess idiots need protection from themselves).
[OP]
Sr. Member
Feb 16, 2013
521 posts
567 upvotes
Toronto
Chickinvic wrote:
Sep 14th, 2017 12:44 pm
The co-signor would have to be an absolute idiot to sign up to being responsible for a mortgage (in case of default) without any claim on the title - and I don't think that it can be done anyways (luckily, since I guess idiots need protection from themselves).
Thanks for the helpful comment.
Clearly you can read between the lines.
Deal Addict
Feb 2, 2014
4117 posts
821 upvotes
Toronto
NotRobot wrote:
Sep 14th, 2017 10:18 am
Hi Kevin,

Why to lender's care who the guarantor is?

Thanks
Because they want to make sure the guarantor is actually helping out financially.

If the guarantor is your rich friend from high school who has his own house and life, odds are he isn't going to help you pay the mortgage. Lender will pass on this.

If the guarantor is your wife and mother of your kids who lives in the house with you, she will likely be helping to pay for the mortgage. Lender is good with this.
Kevin Somnauth, CFA
Mortgage Agent and Real Estate Sales Representative
Member
May 9, 2017
361 posts
391 upvotes
CdnRealEstateGuy wrote:
Sep 14th, 2017 4:52 pm
Because they want to make sure the guarantor is actually helping out financially.

If the guarantor is your rich friend from high school who has his own house and life, odds are he isn't going to help you pay the mortgage. Lender will pass on this.

If the guarantor is your wife and mother of your kids who lives in the house with you, she will likely be helping to pay for the mortgage. Lender is good with this.
OK, thanks.

I've seen a few private lending deals where the guarantor wasn't a spouse or parent. Only consideration was the ability of the guarantor to make payments or repay principal in the case where mortgagor was unable to pay.
Deal Addict
Feb 2, 2014
4117 posts
821 upvotes
Toronto
NotRobot wrote:
Sep 14th, 2017 5:27 pm
OK, thanks.

I've seen a few private lending deals where the guarantor wasn't a spouse or parent. Only consideration was the ability of the guarantor to make payments or repay principal in the case where mortgagor was unable to pay.
Ok, but that's private lending.....I'm talking about A business.
Kevin Somnauth, CFA
Mortgage Agent and Real Estate Sales Representative

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