Can a Co-Signer be Removed From a Mortgage?

The process of getting a mortgage can be quite challenging. Even more so if you don’t have a good credit score or have insufficient income. That’s why having a co-signer is a great solution for those having a hard time qualifying for a mortgage on their own. 

But what happens if you no longer want to have a co-signer? Can a co-signer be removed from a mortgage, and if so, what are the ways to do that?

Let’s find out!

How to Remove a Co-Signer From a Mortgage?

Having a co-signer for a mortgage adds financial security in case the original borrower fails to make on-time payments. A cosigner’s responsibility applies to the entire amount of the loan. It means that if the borrower defaults on their mortgage, the cosigner is obliged to pay the remaining amount. 

That said, lenders are very hesitant about the idea of removing a co-signer from a mortgage loan as it puts them at a higher risk. However, although difficult, the process isn’t impossible.

If you’re interested in applying for a mortgage, check out the Top Canadian Mortgage Lenders in 2022

Removing a co-signer from a mortgage in Canada is possible under certain circumstances. Still, you should always consult with your lender before proceeding with any of the following methods. 

Check if Your Loan Has a Co-Signer Release

When you’re getting a mortgage loan, you can assign one or two co-borrowers to share the financial responsibilities. But sharing does not mean the co-signer on the mortgage is only responsible for half of the payment. 

If the borrower lacks the finances to continue with the claim, the co-signer takes over complete responsibility for paying the mortgage until the due date. 

Therefore, lenders can have different policies regarding mortgages and co-signers. Depending on the policy, some may come with up-front established co-signer rules that guarantee a co-signer release. If this is the case, you can check with your lender to determine if their conditions are met. 

To establish if you, as an original borrower, are eligible for removing a co-signer from a mortgage loan, the lender may give you two years to fulfill certain requirements. 

Namely, you must make on-time payments for 24 months. After the two-year mark, a co-signer can be absolved from the legal responsibility. 

Check if your loan has a co-signer release form mortgage and read the terms carefully. Then, start working towards meeting the loan requirements and ask for a co-signer removal. 

Ask Your Lender

If your loan doesn’t have a co-signer release form for a mortgage, then you should speak to your lender about the possibility of removal. Lenders typically frown upon this option since it’s difficult for them to collect payment if things go south.

Should a co-signer no longer exist on a loan, the lender will be obliged to collect the money from the borrower.

Nevertheless, if the primary borrower is making timely payments, displays an improvement in their credit score, and shows proof of stable income, a lender might choose to accept them as a client. So, when in doubt – call customer service!


Refinance the Loan

If the first two options are not working for you, the only way to remove a cosigner from a mortgage is refinancing.

Refinancing happens when the primary borrower takes out a new loan and uses it to pay off the mortgage loan. The new loan must be entirely in the borrower’s name, excluding the option of a co-signer.

This is only possible if the primary borrower is eligible for taking out a new loan. To qualify for the new loan, you may need to make a down payment, and you will most likely need to have an excellent credit score.  

When looking for a new loan, try to find the lowest possible rates, so it doesn’t overwhelm your budget. However, if that’s impossible to find, even at a fairly higher interest rate, it makes more sense to take the new loan if your goal is to remove the co-signer. 

However, you won’t be able to qualify for refinancing if the lender determines that your debt-to-income ratio and loan-to-value ratio don’t fall within the required values. 

You might also be interested in Best Debt Consolidation Loans in Canada for 2022. 

What If You Can’t Remove a Co-Signer From a Mortgage?

Removing a cosigner from a mortgage in Canada might sound like quite an endeavor after learning how it works, but that’s not a reason to be anguished about it. There are still other ways to do it. Keep reading to find out more!

Declare Bankruptcy

If you don’t see a way out, your co-signer can declare bankruptcy. In an event of bankruptcy, the lender will absolve the co-signer from the legal obligation of paying the loan in case the borrower defaults. 

But while considering this option, keep in mind that if any previous payments were missed, it can hurt your and your co-signer’s credit. This means that bankruptcy won’t prevent you from foreclosure if you couldn’t keep up with your payments. 

If you have decided to go with this option, try contacting a bankruptcy attorney who handles these types of cases and will be able to assess your finances. They will determine the possibility of removing a co-signer from a mortgage loan.

Sell the House/Car

Yes, it may be the last thing on your mind, but if you really find yourself in the bind, it may be the best scenario. Ideally, the value of the house should be worth more than the original purchase price. If that’s the case, you’ll get some extra cash from selling the house and put that money towards a down payment on a new house

You can also contact a realtor to determine the value of your home and find matching options for you. If you do manage to get an offer enough to pay off the loan, then you and your co-signer can execute a deed to transfer the  ownership to the buyer. Your co-signer gets a discharge from the mortgage, and you can get a new mortgage that’s assigned solely to your name. 

But if your home is worth less than the price at the time of the purchase, you’re considered “underwater” on your mortgage. This scenario might put you in a position where you need to go with a short sale of your home if your lender agrees. 

The same applies if you decide to sell your car. Although it is most likely that the worth of your car will be far from the loan amount of your mortgage. However, the money you get from selling your car can help you to put them down towards payment for your new home. 

Work on Your Credit 

Always think about ways to improve your credit score. Not only will it increase the possibility of removing a cosigner from a mortgage but it will increase your chances of getting a new loan in the future as well. So make sure not to miss your monthly payments because they contribute significantly to building up your credit. 

Another way to improve your credit is by checking your credit score for any errors that may impact it negatively. Be sure to follow your credit report regularly to spot any errors and react promptly. 

Are you looking for loans with no credit checks? We have an article for you: Loans in Canada With No Credit Check: 2022’s Best Lenders

Consequences of Removing a Co-Signer

Seemingly a harmless process, removing a cosigner from a mortgage loan doesn’t come without any repercussions. Here are some things to expect:

Larger DTI Ratio

Taking on full ownership of the mortgage will increase your monthly payments, inevitably increasing your DTI ratio. In return, you could face difficulties with future loan qualifications. You might find it harder to get a new loan when your DTI ratio is higher than it’s supposed to be. 

If you plan on taking a new loan in the future, whether it’s a student loan or you need a loan for other purposes, it’s important to calculate your DTI ratio. Knowing your DTI ratio will help you determine whether your current mortgage will impact your borrowing power in the future. 

Risk of Missing a Payment

Being fully responsible for a mortgage can overwhelm your budget and cause you to start missing payments. And everyone familiar with loans knows that late payments lower your credit score. 

That’s why before even considering taking a mortgage, be sure that you have enough emergency funds to cover you in times of financial crisis for at least up to six months. It will spare you a headache and will save your credit score. 



Taking a mortgage comes with a huge responsibility. Both the primary borrower and the co-signer are legally bound for the entire amount and duration of the loan. 

The co-signer is the person that needs to continue with payments if the primary borrower defaults or misses on some payments. 

That’s why lenders prefer having two borrowers on a mortgage to increase their liability. Due to this fact, many lenders don’t like the idea of removing a co-signer from a mortgage in Canada

But as we can see, there are some workarounds. All you need to do is find out what options are available to you and if you’re eligible to carry out the action. 


Does co-signing affect first-time home buyers?

Assuming that at the time of co-singing for a mortgage, the co-signer does not own a home, it could potentially affect the ability to qualify for a down payment in the future. Because many programs that offer downpayment assistance prohibit having another real estate at the time of closing. 

How long before you can remove a cosigner from a mortgage?

Lenders typically give borrowers two years to improve their credit scores and make on-time payments. If borrowers have successfully done their part of the work, the lender will then remove the co-signer from the mortgage. However, this is something to be discussed with your lender first to make sure there is room for such an option and what their requirements are.  

Does removing a cosigner affect your credit?

Removing a co-signer from a mortgage loan can increase your debt-to-income ratio, and end up owning more than you could afford. This can cause you to start missing your payments and lower your credit score. 

How to remove a name from a mortgage in Canada?

Check your contract to see if it has a co-signer release, and talk to your lender about the possibility. Or ask your lender about removal if the loan doesn’t have a co-signer release. 

If this is not an option, consider refinancing your loan, selling your property, or having your co-signer declare bankruptcy. 


When Angela combined her deep-seated love for linguistics with her growing interest for finance and money management, she struck a gold mine. She’s scoured the internet far and wide for all things related to money and finances, including payments, budgeting and investing. Now she’s eager to share her knowledge and skills with the world, determined to make it a better place. In her free time, she loves to read a good book.

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