More parents are co-signing on mortgages for their adult children, a trend that ties both parties' finances closely. A recent Bank of Canada report highlights that in high-cost markets, parental co-signing has become more common, enabling children to purchase more expensive homes. While co-signed mortgages remain a minority, the study found that 11 percent of mortgages involved a co-signer in 2025, up from just four percent in 2004.
Leah Zlatkin, a mortgage expert at Lowestrates.ca, emphasizes that parents considering this arrangement should weigh several factors carefully.
1. Your Debt Service Ratios Are Affected
A co-signed mortgage is included not only in your adult child's debt service ratios but also in yours. This can impact your ability to secure future loans, including refinancing your own mortgage.
2. Your Existing Debts Affect Qualification
Lenders will assess parents' overall debt load before approving a co-signed mortgage. Liabilities such as mortgages, lines of credit, auto loans, and other ongoing debt are all factored into the decision.
3. Renewal and Refinancing Flexibility Can Be Limited
If parents wish to switch lenders at renewal, refinance, or apply for a line of credit, the co-signed mortgage may restrict their options, Zlatkin notes.
4. Exposure to Credit Risk
Any missed payments on the mortgage will affect the co-signer's credit score alongside the adult child's. This could lead to higher interest rates or difficulties when applying for future loans.
5. In It for the Long Haul
Exiting a co-signed mortgage can be challenging. Zlatkin explains that removing a co-signer often requires the adult child to qualify for the mortgage independently, which may take years depending on income, home value, and lending market conditions.
