So you have decided to buy a house and all is set to go. You submitted your income. Your broker says it should take a few hours for the lender and the insurer to get back. You wait anxiously. The broker calls and says –
“The insurer requires a cosigner”
Although it’s definitely not an approval at all, this happens to a lot of people. What can you do? How does this work? Can you still get the Mortgage that you need?
Firstly, realize it can be the Mortgage Insurer or the actual lender (immediately requesting a cosigner before submitting to the insurer).
If it’s the Mortgage insurer (C.M.H.C, Sagen, Canada Guaranty)…
Insurance is involved and they require generally that immediate family members cosign. In this case let’s consider talking to your mother, father, sister, brother, cousin (within limits), grandparents, or great uncle/aunt (within limits). A broker at Mortgage Suite can gladly build a visual financial plan and communicate it with your prospective cosigner. They need to meet and discuss the benefits and disadvantages of cosigning.
If your lender is asking for a cosigner…
Well, switch lenders! But sometimes this doesn’t work. When the request that you obtain a cosigner is asked by more than one lender it’s time to ask the same group of people in the above paragraph. In addition, you can ask friends or close family friends.
There are a few differences in how the cosigner goes on title. You will want to review and be aware of the type of title ownership that has been approved for your cosigner. Sometimes the cosigner will end up purchasing the house if the original purchaser cannot go on title. Make sure you review this with your lawyer and look at a Bearer Trust Agreement.
When it comes to helping you obtain a cosigner we can help. We can discuss the options with your cosigner and explain an Exit Strategy. This exit/removal from title should be in writing and have an expected time frame, as cosigning can impede the actual cosigner from being approved on other loans and mortgages by themselves.
Always remember Independent Legal Advice (I.L.A.) might be required for your mortgage transaction.
Please discuss with a licensed Agent/Broker at Mortgage Suite and build the right path for your approval.
