What is a Covenantor or Guarantor on a mortgage?

Here is a description of the covenantor and guarantor position, as it relates to a mortgage application.

The key difference between a “covenantor and a guarantor” are:

Covenantor:   is on property title, and is also on the mortgage application.

Guarantor:    is NOT on property title, but is on the mortgage application.

Both of the above (depending on what position is chosen) would be on the mortgage application.  Covenantor or Guarantor are added onto the application and would have to disclose all the same information just as the primary applicant(s) would, for example:

1. legal names

2. address

3. disclosure of all assets owned, mortgage, value of home, etc.

4. disclosure of all debts held

5. credit report must be retrieved

6. employment history

7. employment income

From the mortgage lender’s perspective, the covenantor or guarantor position, actually helps to give some “strength” to the application, however, the covenantor or guarantor’s income is not used to actually “Qualify” the primary mortgage applicants.

It is important for the covenantor or a guarantor to understand that if the primary borrower(s) should ever default on the mortgage, the covenantor or the guarantor would be financially responsible to pay the mortgage payment(s) to avoid issues which would arise from non-payment of a mortgage obligation.   It is also important to note that the covenantor or guarantor’s financial status is assessed to determine whether they could feasibly be able to carry the mortgage application, in the event that the primary applicant(s) could not continue making the mortgage payments.

This article was written by Elizabeth Blair on June 11, 2010.  Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario.  Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her websites at:

http://www.missmortgage.ca

http://www.burlington-mortgage.ca

http://www.oakville-mortgage.com

http://www.streetsville-mortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Lic # M08005880 / Brokerage Lic # 10680

Head office is located at:  15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.

First time home buyers :: Get a break on Closing Costs and Land Transfer Taxes

Recognizing that the Canadian housing industry is a significant contributor to our economy and its growth and stability, the Canadian Government has now sweetened the deal to stimulate the housing industry and help Canadians with the costs of purchasing a home.

There are now 2 ways you can get a break on your closing costs and land transfer taxes.

1. CLOSING COSTS

The federal budget tabled in the House of Commons, by the Honourable Jim Flaherty, Minister of Finance on January 27, 2009 entitled “Canada’s Economic Action Plan – Budget 2009” now contains a $750 tax credit to offset closing costs. The tax relief will be extended to those first time buyers who acquired a home after January 27, 2009.

You may view a copy of Budget 2009 at the following link:

http://www.budget.gc.ca/2009/pdf/budget-planbugetaire-eng.pdf

2. LAND TRANSFER TAXES

The land transfer tax makes up the largest portion of a buyer’s closing costs. In December 2007, the Ministry of Revenue extended its Land Transfer Tax Refund to buyers of RESALE homes. This refund could be accessed by first time buyers who entered into agreements of purchase and sale after December 13, 2007. First-time home buyers can now apply for a refund, for up to a maximum of up to $2,000 on the land transfer taxes that they have paid. Details on this previous notice can be found at the following link:

http://www.rev.gov.on.ca/english/taxes/ltt/

This notice was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her website at: http://www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Lic # M08005880  / Brokerage Lic # 10680

Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.