Is it risky to take out a mortgage with someone who is not your spouse?



There is a lot you need to know as you travel the mortgage world.

And, if you’re not careful, it’s pretty easy to get lost in the jargon, procedures, and payments. (Not to mention fines.)

That’s why we hired Jerome Trail, owner and registered broker at Mortgage footprintto answer the most important questions that home buyers and homeowners should understand before embarking on the mortgage process.

Today Trail offers an answer to the question: “What are the risks of entering into a mortgage loan with someone else … Who? not my spouse? ”

Do you have another mortgage question or need mortgage advice?

Contact Jerome at The Mortgage Trail – mention STORIES and you get a free estimate!

Regarding living conditions in Canada, the situation is increasingly becoming a family affair of several generations… In fact, multi-generational housing construction is currently one of the largest real estate growth trends in the country. The high cost of housing is a major factor in this emerging trend; Whether someone is looking for a basic home or a vacation home, it makes more sense than ever to look around your family (and social) circle to see who might be interested in living together on the property.

But, according to Trail, there are important caveats to consider if they are going to make a joint move on such a large purchase.

“The vast majority of mortgages in Canada qualify using a person’s income,” explains Trail. “If there is not enough income to obtain the mortgage required, often someone else comes to the mortgage application to help strengthen the strength of the file so that the original applicant (s) can obtain the mortgage they want. What are the consequences? “

In most cases, he said, the person involved does not realize that he is “burdening” his income with a mortgage application, and this debt will affect their future borrowing capacity.

Elderwood Drive, 37 (Zolo)

“Let’s look at an example,” Trail says. “Susan acquired a condominium under construction in 2017 for $ 400,000. The Condominium Corporation is about to register, and Susan needs a mortgage. Susan has contributed $ 80,000 and needs $ 320,000 in funding. ”

In this situation, Susan’s base salary is $ 50,000 a year, and when she is eligible for about $ 200,000 in mortgage financing, she needs someone’s support.

Susan’s brother, Tom, with a base salary of $ 50,000, agrees to the deal.

“Tom’s income allows Susan to complete the purchase, and Susan is very happy,” Trail describes. “What Tom (most often) doesn’t realize is that all of the $ 320,000 funding, with him as a ‘surety’, would be considered a liability if he ever applies for his own mortgage. The challenge is, if he really wants to break away from Susan’s case – how can Susan qualify without him? “

Likewise, a prenuptial agreement cannot be considered the most romantic part of a prenuptial agreement, and getting a mortgage with someone other than your spouse requires planning the unexpectedeven if it seems like it’s a little muted.

An agreement (in writing) detailing the joint mortgage – coupled with an action plan for what can be done to continue paying off the mortgage if they end up flying alone – can keep peace of mind in situations like this. Indeed, the old adage “prepare for the worst and hope for the best. ”Very suitable for this situation.

This article has been produced in collaboration with STOREYS Custom Studio

Written by
Jerome Trail

Jerome has built a successful mortgage brokerage firm on a commitment to service, attention to detail, and honesty. In 2020 alone, he helped 38 new buyers climb the property ladder. Strong industry relationships and business experience helps him turn refinancing, reverse mortgages, heloc and other solutions into solutions that help increase the capital and wealth of his clients.


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