Mortgage, Money and Dream – Our thoughts on Canadian Mortgage Market
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mortgage co-signorWhen a borrower alone is not qualified for the size of the loan then they often seek another person to prop their ability to borrow more.

It is not very uncommon for elders to co-sign with the younger to let them have access to some borrowed money.

While dads and moms or siblings signs the loan papers along with the principle applicant, it is not usual to get a non-family member to co-sign a loan.

There are few reasons for not getting someone outside of the family involved in personal financial matters. First, people do not like to discuss their financial situation with outsiders and it is not easy to ask a friend to sign for you.

There are some risks involved for both the parties when executing or signing the documents.

When a lender is hesitant to give loan to a borrower then there could be some real reasons. It is important for the second party to know the applicant well, including their financial history.

If in case a borrower fails to pay the loan or defaults any payment then the co-signor remains on the hook till the money is paid in full.

Generally a borrower who is seeking personal loans – try to arrange a co-signor. If it is for business or investment then it is generally not a good idea to co-sign the loan. The borrower stands to reap the benefit form the investment but the co-signor has to pay the bill if borrower goes down under.

For a mortgage, when the homebuyer is unable to get approval then a helping hand from another person is nice. The helper is not required to pay any money unless the borrower defaults. The co-signor has to promise to the lender that if in case the borrower fails to pay then he shall.

The co-signor has to produce evidences showing that he is fit for the promise he is making. His credit report will show the loan too. This will affect his future borrowing ability.

For a person with no credit score or bad score – getting a co-signor to apply for a credit card or some small loan is actually a good idea to build credit.

When co-signing a larger loan like mortgage – one should look at all the possibilities.