More parents are co-signing the mortgages of their adult children, giving them a boost when it comes to buying that elusive first home \u2014 but some experts warn the practice comes with its own set of risks.<\/p>\n
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Of all mortgages issued in Canada to first-time homebuyers, the share of those co-signed by parents rose from around four per cent in 2004 to approximately 11 per cent in 2025, analysis from the Bank of Canada said on Tuesday.<\/p>\n
\u201cThe practice is especially prevalent in Canada\u2019s largest and most expensive housing markets, such as Toronto and Vancouver, where affordability pressures are most intense,\u201d the report said.<\/p>\n
It \u201cenables many adult children to take on larger mortgages than they could afford on their own,\u201d it added.<\/p>\n
Co\u2011signing is also more common among first\u2011time buyers who are younger and who have lower credit scores and lower incomes, it added.<\/p>\n
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\u201cWe have been seeing a number of parents providing gift money to their kids to buy a house. But not everyone has wealthy parents. Co-signing is a way for most parents to help their children buy a house,\u201d said Kevin Fettig, former Bank of Canada and CMHC economist and president of CMI Financial.<\/p>\n
The main benefit of co-signing a mortgage is that it makes it possible for one party to qualify for financing when they otherwise wouldn\u2019t have had the income or credit to do so, said Ratehub.ca mortgage expert Penelope Graham.<\/p>\n
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It\u2019s important that everyone involved knows what they\u2019re getting into, she said.<\/p>\n
\u201cCo-signing a mortgage means being added to the mortgage title and becoming fully liable for mortgage payments. The main risk here is, should your adult children find themselves in a position where they cannot pay their mortgage, you will be financially responsible for those payments,\u201d she said.<\/p>\n
On the other hand, younger Canadians who had their parents co-sign should be aware that the co-signing parent will legally have say over the ownership of that home \u2014 that means they can weigh in when it comes time to sell, refinance or renovate the home, she added.<\/p>\n
Parents who co-sign might be more vulnerable than their kids, said NerdWallet Canada\u2019s mortgage expert Clay Jarvis.<\/p>\n
\u201cBlowing a mortgage when you\u2019re 25 is something you can recover from. Paying off two mortgages when you\u2019re in your 50s and trying to prepare for the next 30 years without a salary would scare me,\u201d he said.<\/p>\n
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