With property prices increasing substantially each year and the federal government making mortgage qualification more difficult with “stress tests”, many young buyers in our area are looking to family members to co-sign on their first mortgage. As a co-signer, you become part of the purchase and mortgage and are legally a part-owner of the property. As such, you can speak to the mortgage lender directly, you will receive notices of any mortgage issues or missed payments, and the property cannot be sold without your consent. However, there are also some tax implications and some costs to be removed from the property title later, and being a co-signer will potentially impact your ability to qualify for more borrowing yourself because your son’s mortgage debt counts against you when you apply for new borrowing.
You should only co-sign for a borrower you trust and you should obtain independent professional advice before signing to ensure you know the impact it might have on your own financial goals.