What is a Cosignor?
Equal partner in the agreement Mortgages and loans are an integral part of the financial market. These transactions between the borrower and the lender are confirmed by a contract that is signed between them. It is a legal agreement that lays down the terms on which the transaction has been made. The loan or mortgage depends on the trust between the lender and the borrower.

The lender must have confidence on the borrower for him to provide the money. However in some situations the lender may not be confident about the borrower’s ability to return back the money. This is where a Co-signor comes in. the co-signor is an equal partner in the mortgage. The responsibility of the repayment of the loan or mortgage also falls on him. The Co-signor may be a close associate or friend of the primary borrower. The co-signor will add to the confidence of the lender on the mortgage.

Effects of Co-signing on a mortgage It might seem that it does not involve much effort on the part of the co-signer. Co-signing may be a favor or help being done and it might not go bad most of the times. However when it goes bad, it will have a severe effect on the co-signor. If the primary borrower does not payback the mortgage, the responsibility comes to the co-signor. The installments defaulted should be paid by the co-signor. It will also affect the co-signor credit score. The installment will be considered as an expense since the co-signor is also a part of the mortgage.

When pursuing future mortgages or loans, it should be communicated to the lender by the cosignor. Under the federal law in Canada it is mandatory for the lender to inform the co-signor about his obligations on the agreement. The creditor can try to get the payments from the co-signor without trying to get the same from the primary borrower. The process however is prohibited in some provinces where the creditor is restricted from trying to get the payments without trying to get it from the primary borrower.

The co-signor sometimes can even change the obligations in the agreement so that he is not required to pay the other charges that are charged for late payments and other fees. The co-signor should look through all the disclosure statements before signing the agreement.

Differences between a Guarantor and a cosignor
The purpose of the guarantor and a co-signor are pretty much the same but the guarantor does not figure in the title of the document. He is not required to play a full part in the agreement. Co-signor plays a full part in the process and his name is mandatory to be present in the document title. Co-signing a document is a delicate process while care and caution must be exercised to limit the potential negative effects. The documents pertaining to the agreement must be clearly verified and being aware of the obligations is important for the co-signor. The Co-signor must be aware of the provincial rules regarding co-signing a mortgage or loan agreement. What is a Cosignor?

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