Bad Credit Mortgages

How to Remove a Cosigner from your Mortgage

How to Remove a Cosigner from your Mortgage

Since getting approved for a mortgage is now more difficult due to stricter rules and tight requirements, cosigned mortgages in Canada are quite common. When you either have an unstable employment history, high debt to income ratio, or a poor credit score, asking a close relative who could vouch for you and your ability to pay is an easier alternative. For some, it would be less of a hassle to get someone to cosign your mortgage than carrying the high-interest rates of bad credit mortgage in Canada. As long as you and your cosigner both know your responsibilities in the mortgage, then there would be no problem.

When is the best time to remove a cosigner from your mortgage?

Four years ago, you finally purchased a home you could call your own. You could not have done it without the help of your mother. She had a significant role in getting your first home by agreeing to be your cosigner. However, the mortgage she agreed to cosign with you prevents her from getting a new loan.

Do not wait until your mother tells you to remove her from the mortgage. As the one who is primarily responsible for the mortgage, you must do all that you can to fill in the gaps of why your mortgage was not approved without a cosigner. If you have a high debt to income ratio, work on paying off your debts slowly but surely. If you have a poor credit score, you can get credit repair services from professionals. If you have an unstable employment history, try not to quit or resign from your recent employment. Perhaps, you can even take a part-time job.

Once you think you are capable of financing the mortgage on your own, then you can remove your mother as a cosigner.

What are the things I need to do to remove a cosigner?

Your lender will not go easy on you if you decide to remove a cosigner. Having a cosigner means they have the opportunity to go after the cosigner if you, the principal borrower, default on your mortgage. Lenders will have a higher risk on their part if you remove a cosigner. Although these are inevitable responses of your lender, you can always do the following if you are a hundred percent certain and ready to remove your cosigner:

Seek the professional help and advice of a mortgage agent

There’s no harm in approaching a mortgage specialist to ask what you can do about your cosigned mortgage. They have vast experience and knowledge about mortgage, so they sure know the answers to your questions.

Ask your lender for options

Since you’re still tied to your current lender, you can always ask them for the options they have when you remove a cosigner. Yes, the process won’t be that easy. They have to have proof that you are fully capable of paying on your own. When they agree on removing your cosigner, they would most likely get you to sign another contract.

Refinance your mortgage

As the primary borrower of the mortgage, you have the option to refinance to remove the name of your cosigner. Refinancing means you can take out a new loan to fully pay your outstanding mortgage balance. You can either stay with your current lender and get new mortgage terms and rates or find another lender with better offers.

How much will it cost to remove a cosigner?

Removing a cosigner comes with a price. Well, for starters, there’s a prepayment fee. This fee is collected when you break the contract of your mortgage. When you choose to refinance, you also have to pay for closing costs. To know more about the associated costs you have to pay when removing a cosigner, talk to your lender or your mortgage agent first before making a decision.

What if I’m the cosigner, and I want to remove my name from a mortgage?

So, what if you’re the cosigner and the primary borrower of the mortgage is consistent with the payments? Of course, you want to remove your name from the mortgage and save your credit history and score! Talk to your primary borrower first to sort things out. You can either tell him or her to make up for the lost payments and try to pay faster so you can remove your name from the mortgage quickly. If worse comes to worst, you may have to ask your primary borrower to close the account.

Whether you want to remove a cosigner from a mortgage or want to remove your name as a cosigner, contact Credit Repair Now. Our mortgage specialists may have the best solutions to your cosigner problems!