Joint signing of a mortgage – Mortgage issues

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April Dunn – | Story: 343509

With the new, tougher 5.25% mortgage qualifying rate and today’s expensive real estate, it can be very difficult to qualify for a mortgage.

Even with good income and some savings for the down payment, you may not be eligible for the amount of mortgage required to acquire the type of property you want to own.

As a result, you may need a joint signature, but here’s what you and your second signer need to know that they are signing your mortgage.

  • If you are unable to make payments for any reason, your co-signer is expected to make them on your behalf. By signing the mortgage documents, they took full responsibility for the payments.
  • Regardless of whether someone is the primary borrower, co-borrower, guarantor or co-owner, if you use a mortgage, you are 100% responsible for the mortgage debt and everything related to it. The co-signer has all the same legal obligations as everyone else on the mortgage.
  • If payments are not made, it is likely that the creditor will sue the co-author. This includes all available collection methods, such as obtaining a court order or withholding wages or bank accounts. They may even take over the property or assets of a co-author to cover losses.
  • When you co-sign a mortgage, all debt owed on the co-signed mortgage is set off against you. This means that if you want to buy another property in the future, you will have to include the payments on the co-signed mortgage in your debt service ratios, even if you are not the one making the payments. This can significantly affect the amount you can borrow in the future.
  • After the initial term expires, the signatory will not be automatically excluded from the mortgage. The person who was subscribed to the joint subscription will have to apply for a new mortgage on their own behalf and meet the criteria in their sole discretion. If they do not qualify at this time, the co-signer will hold the mortgage for the next term.

There are also other potential issues to consider before applying for someone’s mortgage loan, and it is wise to seek professional tax advice and legal advice.

  • This can have implications for your personal income taxes. You can accumulate a liability to pay capital gains taxes in the future. This should be discussed with your tax accountant.
  • Joint signing may affect land transfer tax relief for first-time home buyers.
  • You trust your credit history to another person.

Before signing any debt together, please make sure that you fully understand all the possible consequences and how it might affect you personally.

I am happy to speak if you are considering co-signing a mortgage loan, so please call me at 1-888-561-2679.

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