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Co-Signing / Guaranteeing

Co-Signing / Guaranteeing

Credit3 min readFebruary 11, 2026
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A guarantee (or suretyship) is an act by which a person (the guarantor or co-signer) commits to a creditor to fulfill the principal debtor's obligation if the debtor defaults. In Quebec, suretyship is governed by articles 2333 to 2366 of the Civil Code of Quebec (CCQ). Suretyship can be simple or solidary. Under simple suretyship, the guarantor benefits from the benefit of discussion (art. 2347 CCQ), allowing them to require the creditor to first pursue the principal debtor. Under solidary suretyship, which is more common in practice, the guarantor waives this benefit and can be pursued directly. In the mortgage context, guaranteeing has major consequences for the guarantor. The guaranteed debt appears on their credit file at Equifax and TransUnion and factors into their debt service ratio calculations (GDS and TDS) under OSFI rules. This can significantly reduce the guarantor's own mortgage borrowing capacity. AMF-certified mortgage brokers in Quebec must inform anyone considering co-signing about the real risks: potential debt repayment, credit détérioration, and reduced future borrowing capacity.

Co-Signing: What Every Guarantor Must Know

Co-signing for a loved one is a generous gesture that can carry significant financial consequences. In Quebec, suretyship is a contract governed by articles 2333 to 2366 of the Civil Code of Quebec (CCQ). Before agreeing to guarantee a mortgage or any other credit, it is essential to understand the exact nature of this commitment and its répercussions on your own financial situation and credit file.

The Legal Framework of Suretyship in Quebec

Suretyship is defined in article 2333 of the CCQ as a contract by which a person binds themselves toward a creditor to perform the debtor's obligation if the debtor fails to do so. The guarantee may cover part or all of the debt. There are two main forms of suretyship in Quebec: simple suretyship and solidary suretyship.

  • Simple suretyship: the guarantor benefits from the benefit of discussion (art. 2347 CCQ), meaning they can require the creditor to first attempt to recover the debt from the principal debtor before turning to them. The guarantor also benefits from the benefit of division if multiple sureties are involved.
  • Solidary suretyship: the guarantor waives the benefit of discussion. The creditor can pursue them directly, simultaneously with or separately from the principal debtor, for the full debt. This is the most common form required by financial institutions for mortgage loans.
  • Guarantee of a future obligation: provided for in article 2362 of the CCQ, it can be revoked as long as the principal obligation has not yet arisen. This provision offers some flexibility to the guarantor.

Impact on the Guarantor's Credit File

Mortgage suretyship is recorded on the guarantor's credit file at Equifax and TransUnion. The full amount of the guaranteed debt appears as a financial commitment of the guarantor. This entry directly impacts the guarantor's credit score and borrowing capacity. The total guaranteed loan amount factors into the total debt service (TDS) ratio calculation, which is capped at 44% under OSFI's Guideline B-20. If the principal debtor makes a late payment, this negative information is also recorded on the guarantor's file.

Concrete Consequences for the Guarantor

  1. Reduced borrowing capacity: The guaranteed amount is counted as the guarantor's debt. If you guarantee a $300,000 mortgage, this amount is added to your own debts in the TDS ratio calculation, which may prevent you from obtaining your own mortgage.
  2. Risk of debt repayment: If the debtor defaults, the solidary guarantor can be pursued for the full mortgage balance. The creditor does not need to demonstrate that they have exhausted their recourse against the principal debtor under solidary suretyship.
  3. Credit score impact: Any late payment by the principal debtor, even a minor one, can result in a negative entry on the guarantor's credit file at Equifax and TransUnion, affecting their score for a period of six years in Quebec.
  4. Difficulty withdrawing from the guarantee: The guarantor cannot unilaterally revoke their commitment for an existing debt. Release can only occur with the creditor's consent, through full debt repayment, or through refinancing that excludes the guarantor.

Recommendations for Mortgage Brokers

AMF-certified mortgage brokers have a professional duty under the LDPSF to fully inform anyone considering acting as a guarantor. This information must include a clear explanation of financial risks, the impact on the credit file, and the difficulty of withdrawing from the guarantee. The broker should recommend that the potential guarantor consult an independent legal advisor before signing. The broker should also explore alternatives to suretyship, such as a larger down payment, a B lender willing to approve the application without a guarantor, or restructuring existing debts to improve the primary borrower's ratios.

Frequently Asked Questions

What is the difference between simple and solidary suretyship?
Under simple suretyship (art. 2347 CCQ), the guarantor can require the creditor to first pursue the principal debtor before turning to them. Under solidary suretyship, the guarantor waives this right and the creditor can pursue them directly for the full debt without first attempting to collect from the debtor.
Does a guarantee appear on my credit file?
Yes, the guaranteed debt is recorded on the guarantor's credit file at Equifax and TransUnion. It is factored into debt service ratio calculations (TDS), which can reduce your ability to obtain your own mortgage or other credit.
Can I withdraw from a guarantee?
Generally, a guarantee cannot be unilaterally revoked for existing debts. However, the guarantor may be released if the creditor agrees to a replacement, if the debtor refinances the loan, or if the debt is fully repaid. Suretyship for future debts can sometimes be revoked (art. 2362 CCQ).
Is co-signing common in mortgage applications?
Yes, it is common when the primary borrower does not qualify alone under OSFI rules. Parents often co-sign for first-time homebuyer children. Some lenders require a guarantor when the debt service ratio is borderline or when credit history is insufficient.
What are the real risks for a mortgage guarantor?
If the debtor defaults, the guarantor may be required to repay the entire mortgage. Additionally, any late payment by the principal debtor can negatively affect the guarantor's credit file. Finally, the guarantor's borrowing capacity is reduced for as long as the guarantee remains in effect.

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Educational information only. This does not constitute financial advice under the Act Respecting the Distribution of Financial Products and Services (LDPSF). Consult an AMF-certified mortgage broker before making any financial decision.

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