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It is not uncommon for parents to help their adult children enter the housing market.
For some, this helps in the form of co-signing a child’s mortgage, but experts warn that this means taking on financial risks that they may not understand and can affect their own debt and retirement plans.
“The most important thing about co-signers is that if there are four people on the mortgage, each of them is not responsible for 25%; each of them is 100% responsible for it,” said Ron Butler, the lead broker of Butler’s mortgage.
Among several major lenders in Canada, he noted that only one person listed on the mortgage agreement needs to sign a renewal before it can take effect.
“The mortgage may have four people. The bank will accept a single person’s signing to handle the renewal, and once the renewal is processed, all of which will be locked for five years,” he said.
Butler says once you sign together, it’s hard to evacuate yourself from your mortgage.
“Honestly, you probably should never co-sign. Co-signing, guaranteeing a mortgage is full of dangers,” he said.
Butler recalls an incident that caused the mother to have a “magnificent fall” with her son after signing a mortgage, which totaled more than a million dollars years ago.
“Now she absolutely wants to get rid of the mortgage. She doesn’t want any financial connections with her son,” he said.
He said she was told her son could renew the mortgage by herself when she tried to approach the bank and told the lender that she would not sign the renewal.
Butler said while co-signatures with children’s mortgages weren’t that popular, amid a slowdown in the real estate market, it was the “epidemic” of the early real estate madness period in the pandemic era, when interest rates hit rocky lows.
CA expert Leah Zlatkin pointed out that if there are multiple children who may need help in buying a home that leads to “family conflict”, parents should consider the potential impact of co-signatures that could have potential impacts.
A child’s co-signature may affect the ability of parents to help other children in the same way, because a person can only bear so much debt.
Instead of co-signing, Butler said that offering a monetary gift or early inheritance might make more sense for parents who want to support their children’s real estate desires.
“If you have money in hand and want to inherit early, that’s absolutely OK,” he said, adding that parents should know their ability to give.
Zratkin said parents can choose to take out a home net worth credit and gift to the children, or just provide a sum of cash.
Regardless of which option they choose, she said parents choose more gifts than co-signed because then parents “have no responsibility for anything.”
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Co-sign gift payment Leah Zlatkin mortgage strategy mortgage tips Ron Butler Canadian news
Last modified: September 4, 2025
