What is a Mortgage Guarantee?

WHAT IS A MORTGAGE GUARANTEE?

A mortgage guarantee is an assurance by a third party (i.e. the guarantor) that they will assume responsibility for the obligations of the borrower in the event the borrower defaults on the terms of the mortgage. Depending on the mortgage instructions, guarantors may require independent legal advice or a waiver of independent legal advice. In our experience, a lender will typically require the guarantor to have a good credit history and a steady income sufficient to make mortgage payments. A guarantor with a strong credit history and a steady salary may be able to provide enough assurance for a lender to approve a borrower for a mortgage that otherwise would have been rejected. In a mortgage transaction, while the guarantor is typically added to the mortgage, the guarantor is not added to the title of the property.

If you have been asked to become a guarantor for an individual or entity’s mortgage transaction, contact us. today to set up an initial consultation where a member of our real estate law team will be able to answer any questions you may have about being a guarantor.

Disclaimer: The information contained in this article is not to be construed as legal advice. The content is drafted and published only for the purpose of providing the public with general information regarding various real estate and business law topics. For legal advice, please contact us.

About the Author:

Shahriar Jahanshahi is the founder and principal lawyer at Jahanshahi Law Firm with a practice focus on representing business star-ups and investors in the province of Ontario. For further information about Shahriar Jahanshahi, click here.