30 Dec

Co-Signing vs Being a Guarantor on a Mortgage

Mortgage Tips

Posted by: Chanele Langevin

Have you ever been asked to co-sign or become a Guarantor for someone on a loan or mortgage?  This is generally something that is considered very personal to people and usually involves close family members or parents and children.  Having sufficient income is not all that is necessary to obtain a mortgage.  The borrower must also have a certain level of credit to be approved.  When a client has sufficient income but too much debt, as a mortgage agent, I will recommend they have someone co-sign or be a guarantor on their mortgage to be approved.  There are differences between being a co-signer and being a guarantor.  It is important to know these differences and make sure you are comfortable with your responsibilities when you agree to help someone secure a mortgage.


When purchasing a property in Canada and requiring a co-signer to secure the mortgage, the co-signer must reside in Canada; there may also be even stricter stipulations depending on the lender.  Some lenders will require the co-signer to reside in the same province as the initial borrower and or of the property being purchased as well.  Although a relative can commonly co-sign on a mortgage, it is not a requirement that the co-signer and borrower be related.  Also, the co-signer does need to qualify for the mortgage in order for the loan to be approved.  This means that they must have sufficient income and excellent credit history as if they were applying for their own financing.  It is important to keep in mind that any other mortgages the co-signer has will be part of the debt load.  A co-signer will be legally registered as an owner of the property. They sign legal documents regarding the property and are liable for mortgage payments in the event the borrower defaults on loan payments.  For a co-signer to be removed from legal ownership of a property, the borrower must reapply for the mortgage (covenant release) and be successful at qualifying without the co-signer.


A Guarantor is someone that guarantees to pay any mortgage payments that the borrower does not follow through on paying.  Therefore, the guarantor must have a source of income and also have excellent credit to be approved.  Guarantors are NOT listed as a titleholder on a property.  If mortgage payments are not made by the borrower, the guarantor is responsible for making the payments while not having any rights to the actual property.  Many Guarantors are parents helping children secure a mortgage because they either do not have enough credit history or have small delinquencies on their credit history.

Co-signers and Guarantors must also keep in mind that all loans they have signed onto will be taken into account when applying for any other type of credit.  100% of the payments will be included in debt ratios by all lenders when considering any type of financing.

With the current stipulations in place for home buyers, it can make home ownership seem unattainable, especially if there has been any kind of credit issues or delinquencies in the past.  Having someone become a co-signer or guarantor on a mortgage can make all the difference and may be the best scenario for many people that are capable of making the payments required.

As a co-signer or guarantor it is important to research and understand the responsibilities but also important that you have full trust in the person you are helping out.  For the majority of situations, it is very rewarding to help someone accomplish their home ownership dream while also strengthening your own credit history.


1 Dec

The Facts of Mortgage Life and Disability Insurance

Mortgage Tips

Posted by: Chanele Langevin

One of the responsibilities I have as a mortgage agent in Grande Prairie, Alberta is to ensure that my clients are aware of and understand the importance of having life and disability insurance on their mortgage. There are so many different types of insurances that we are offered throughout our lives that it can be very confusing and frustrating. I am very proud to let people know that Dominion Lending Centres has teamed up with Manulife to offer a very straight forward life and disability insurance called Mortgage Protection Plan® (MPP). There are many aspects to MPP that enable it to stand apart from other insurances offered through other companies.

Whether you are a first time home buyer or an experienced home buyer, a mortgage is most likely the largest debt you will have to your name. No one likes to think about the possibilities of themselves or their significant others dying or encountering a disability that prevents them from earning income. The reality is that the mortgage payments still need to be paid. Many people are under the impression that they have life and disability insurance through their work if they have health benefits. That is a different type of insurance and is just a lump sum that is paid in the event of death. Mortgage and disability insurance are called a debt insurance and covers off the actual cost of the debt.

When I secure a mortgage for a client, I have the ability to offer MPP which is a portable insurance and goes with the client from house to house and lender to lender. If you move and your mortgage amount increases, you have the option to top up on the insured amount. Adversely, when a client goes to a financial institution for their mortgage, they will be offered life and disability insurance. The insurance offered is generally specific to the mortgage on the home you are purchasing. This is a way for financial institutions to try to retain the client. If the client moves or chooses to leave for a new financial institution, they will lose the insurance they had been paying for.

Benefits of Manulife Mortgage Protection Plan®

  • Coverage begins as soon as your application is submitted
  • You choose your payment option: monthly, semi-monthly or bi-weekly
  • Coverage moves with you: house to house, lender to lender
  • Your premium is locked in at the age you were when you applied, there are no increases due to your age moving forward
  • Every eligible applicant is approved. For those that do not qualify due to pre-existing health conditions there is the option to apply for accidental death and accidental disability at reduced premium amounts
  • There is a 60 day money back guarantee. If you change your mind, you will be refunded
  • All mortgages are protected including private mortgages and Home Equity Lines of Credit
  • In the event of a death, Manulife pays the monthly mortgage payment and property tax payment until all paperwork is handled for the claim

Facts about the MPP Disability Insurance

  • Disability is not just physical, mental illness is also covered
  • Premiums remain the same throughout the lifetime of the policy
  • Disability benefits are not reported as income and are not subject to income taxes
  • Disability insurance does not have to be combined with life insurance (many insurance companies will not allow disability insurance to be purchased without also having life insurance purchased)
  • Coverage is portable from house to house and lender to lender
  • Provide up to $10,000/month for 24 months of coverage. If client returns to work before the 24 months of coverage have been used, Manulife will pay an extra month payment to help the client build up some hours at their job
  • There is no limit to how many claims can be made over the lifetime of the policy. If 24 months has been used up and then the client has another situation with disability down the road they will be eligible for another 24 months of coverage
  • All occupations are covered
  • There is no financial review or verification as it is based on the client’s mortgage and not on their income. This makes it especially beneficial for clients who are self-employed.

Two Additional Benefits Offered by Mortgage Protection Plan®

  • Terminal Illness: If you are diagnosed with a terminal illness after 6 months have passed from the insurance start date, Manulife takes over your mortgage payments (terminal illness means progressive in nature, cannot be cured and cannot be treated and therefore it is expected to result in death within 12 months of diagnosis)
  • Waiver of Premium due to Job Loss: If you involuntarily lose your job after 6 months from insurance start date, your life and disability insurance premiums will be waived for 3 months

With our world ever changing it is very important that anyone investing in a home know what realities come along with having a mortgage. Many people do not understand insurance as a whole and by dealing with a mortgage broker like myself it can give great comfort knowing that your best interests in the entire process are always my first priority.