No Ownership: A guarantor does not have ownership in the property. They are simply providing a guarantee to the lender that the mortgage will be paid.
Secondary Responsibility: They are only liable for the debt if the primary borrower defaults. The lender will try to collect from the borrower first.
Stronger Credit Required: Guarantors are typically required when a borrower has weak credit, limited income, or a short credit history.
Common in Special Cases: Often parents act as guarantors for their children when buying their first home.
Shared Ownership: A co-signer has their name on the property title and shares ownership with the primary borrower.
Equal Responsibility: They are equally responsible for the mortgage payments from day one. If payments are missed, it impacts both credit scores.
Common in Joint Purchases: Co-signers are often used when buyers need extra income to qualify for a larger loan or when purchasing as a couple or business partners.
Impact on Credit: Both a guarantor and a co-signer’s credit score will be impacted if payments are missed.
Future Borrowing Limitations: Since the mortgage will appear on their credit report, both may have reduced borrowing capacity for other loans.
Legal and Financial Advice: It's wise for both parties to get independent legal and financial advice before committing to ensure they understand the risks.
