A guarantor is someone who signs a personal contract with the lender agreeing to compensate the lender for any losses incurred if a mortgage goes into foreclosure.  As a guarantor, you are not an owner of the property (your name is not on the title certificate) and you are not a mortgagor (borrower) on the mortgage contract either. Guarantors are typically requested if the mortgage applicants have enough income and down payment to qualify for the mortgage on their own, but have not established sufficient credit history to be approved on their own.

The benefit of being a guarantor is that the mortgage debt does not count against you when you are applying for other debt such as mortgages or vehicle loans. You also will not have any capital gains taxes should the property sell, since you are not a legal owner.

The disadvantages of the guarantor position are that you have no legal rights to the property or the mortgage contract, which means the property can be sold without your knowledge or consent and you cannot call the lender to request any mortgage details or make any changes.

Being a guarantor is sometimes compared against being a co-signer on a mortgage, which is a more secure position. See Co-Signer for more information.