Life doesn’t always go according to plan. Even our most motivated Rent to Grow Homes tenant buyers can hit a bump on the road to ownership — a sudden job loss, a credit score drop, or an unexpected debt. In these moments, one tool can make the difference between losing your home and getting the keys in your hand: a co-signer.

In this post, we’ll cover:

• What role a co-signer has
• What makes a good co-signer
• The benefits of having a co-signer
• The risks to the co-signer
• How to ask someone to be your co-signer
• The cost to transfer ownership from the co-signer to you or your partner

And we’ll bring it to life with an example from a Rent To Own situation.

1. What Role Does a Co-Signer Have?

A co-signer is someone who applies for the mortgage with you. Their income, employment history, and credit score are added to yours when the lender reviews the application.

Think of it like adding a booster engine to your application — it helps you reach the lender’s qualifying requirements when your own numbers aren’t quite strong enough.

A co-signer can help in situations such as:

• You’ve had a temporary job loss and your income isn’t high enough at the moment.
• Your credit score has dipped below the bank’s cut-off, but the co-signer’s score is strong.
• You have a high debt-to-income ratio, and the co-signer’s income offsets it.

Importantly, the co-signer is equally responsible for the mortgage. If you don’t make payments, the lender will expect them to step in.

2. What Makes a Good Co-Signer?

The ideal co-signer is financially stable, has excellent credit, and trusts you completely. Lenders will want to see:

• Good to excellent credit score (usually 700+)
• Strong, stable income (employment or self-employment with a history)
• Low personal debt
• A willingness to remain on the mortgage for the required period

Often, parents, siblings, or close friends are the most common co-signers — but trust and transparency are crucial.

3. The Benefits of Having a Co-Signer

The most obvious benefit? You can close on your home when your own mortgage approval might fail.

For Rent to Grow Homes clients, that means your years of on-time rent, careful saving, and credit repair don’t go to waste at the finish line. A co-signer can:

• Save the deal if your personal financial situation changes suddenly.
• Help you secure a lower interest rate by improving your application’s strength.
• Allow you to buy at the pre-agreed price instead of extending the deal by a year at a higher price or even losing the property and starting over.

4. The Risks to the Co-Signer

From the co-signer’s perspective, this is not a small favor — it’s a major financial commitment. The risks include:

1. Shared responsibility for the mortgage — If you don’t pay, they must, or their credit suffers.
2. Impact on their borrowing ability — The mortgage will count as their debt, potentially limiting their ability to get their own loans.
3. Credit damage — Any missed payments appear on both your credit reports.

Because of this, many co-signers want clear timelines and agreements about how and when they’ll be removed from the mortgage.

5. How to Ask Someone to Be Your Co-Signer

Approaching someone to co-sign for you is a delicate conversation. Here’s how to handle it:

1. Be upfront about the reason — Explain why you need the co-signer and what’s changed since your original plan.
2. Show your commitment — Share your rent-to-own track record, savings progress, and credit improvements.
3. Outline the plan for removal — Explain when and how you’ll refinance into just your name.
4. Offer legal clarity — Be willing to sign an agreement about responsibilities, payments, and what happens if things go wrong.

Remember: this is as much about protecting their interests as it is about helping you.

6. The Cost to Transfer Ownership from the Co-Signer to You or Your Partner

OWhen you’re ready to remove your co-signer — usually by refinancing into a mortgage solely in your name — there are several costs to consider. These can vary depending on your lender, your mortgage term, and the province you’re in, but here are the common ones:

1. Refinancing Fees
   • Appraisal: $350–$600 (the lender needs to confirm your home’s current value).
   • Legal Fees: $800–$1,500 for a real estate lawyer to change the mortgage and title.
   • Lender Fees: Some lenders charge $200–$500 in administrative or processing fees.
2. Mortgage Penalties (if refinancing before the end of your term)
   • Variable-Rate Mortgage: Usually 3 months’ interest.
   • Fixed-Rate Mortgage: The higher of 3 months’ interest or the interest rate differential (IRD), which can be much higher.
3. Land Transfer Tax (LTT)
   • Not always applicable — but if the change in ownership is treated as a “sale” rather than simply removing a co-signer, LTT could apply. In Ontario, for example, a $500,000 home could trigger an LTT of about $6,475. The good news is, if the co-signer is a family member and no money changes hands, your lawyer may be able to structure it to avoid LTT.
4. Title Insurance Update
   • Sometimes $100–$300 to update the policy when changing ownership details.

Pro Tip:
To save thousands, we recommend that our Rent to Grow Homes tenant buyers wait until their mortgage renewal date to remove a co-signer. This way, you can refinance without breaking your mortgage early, avoiding big penalty fees. This means that you might decide to get a 1 or 2 year mortgage with your co-signer and then when that mortgage is up for renewal, you can remove the co-signer.

7. Miguel & Sonia’s Real-World Example

When Miguel lost his job two months before closing, his brother-in-law Carlos stepped in as a co-signer, allowing them to close on their $463,050 home at the pre-agreed rent-to-own purchase price.

Two years later, Miguel had a stable new job, their credit scores had improved to over 700, and they had built even more equity in the home. They decided it was time to refinance and remove Carlos from the mortgage.

Here’s what it cost them:

• Appraisal: $425
• Legal Fees: $1,200
• Lender Fee: $300
• Title Insurance Update: $150
• Mortgage Penalty: $0 (they timed the refinance to their renewal date to avoid this)
• Land Transfer Tax: $0 (the lawyer confirmed this was not a taxable transfer since no money changed hands)

Total cost: $2,075

Because they planned the timing carefully, they avoided thousands in mortgage penalties and land transfer tax. For them, this was a small price to pay for the peace of mind of owning their home in their own names — and for Carlos, it was the official end of his responsibility for their mortgage.