Security and another signer address different risks

Collateral is property supporting repayment of a debt; a cosigner or guarantor is a person taking on a contractual responsibility. These arrangements are not interchangeable. A lender may assess the asset, the additional signer or both, and may still consult credit information. Clarify whether the person is becoming a joint borrower, providing a guarantee, or granting security over property they own.

Identify whose asset or liability is involved

The written terms should explain the amount covered, when responsibility arises and how the obligation can end. A guarantor should not rely on a private promise that the main borrower will always make the payments. FCAC’s joint-borrower guidance explains the position at federally regulated institutions, while a non-profit counsellor can review the effect on the household budget. Where property or substantial liability is involved, each signer should obtain advice appropriate to the contract and province before committing.

Read the undertaking before anyone signs