Background: Personal Guarantee for a Limited Company Buy-to-Let Mortgage
Fast ILA was instructed to advise a director of a limited company who was securing buy-to-let finance through the company for a residential investment property.
The lender required the director—who was also the sole shareholder and director of the borrowing company—to sign a personal guarantee and indemnity as part of the mortgage conditions. This is a common lender requirement where a company is borrowing for property investment purposes and is not offering sufficient assets or security of its own.
Although the property was being acquired in the name of the company, the director was being asked to take on full personal liability for all sums due under the mortgage, including legal costs and future interest. The lender also required a Certificate of Independent Legal Advice (ILA) from a qualified solicitor before drawdown.
Understanding the Risk: What the Guarantee Actually Meant
Upon review of the personal guarantee deed, our team identified several material legal risks. The guarantee:
- Required the client to be personally liable for the entire mortgage as if he were the borrower himself;
- Included a continuing indemnity, meaning his liability would remain in force even if the company was dissolved or the facility amended;
- Permitted the lender to enforce the guarantee on demand, without first pursuing the company or the secured property;
- Included a waiver of defences, meaning he could not argue later that he didn’t consent to variations or refinancing;
- Bound the client’s estate and personal representatives, meaning the guarantee would survive death and could be enforced posthumously;
- Required the guarantor to pay all legal costs, interest, and enforcement charges, on an indemnity basis;
- Allowed for payments to be held in a suspense account, which could delay crediting against the principal;
- Included an acknowledgement of having received independent legal advice, making it vital the advice be properly delivered and recorded.
Our Role: Independent Legal Advice That Protected the Client—And the Mortgage Completion
Fast ILA reviewed the guarantee deed and the lender’s full mortgage offer, which revealed:
- Loan Amount: £157,914.45 (including fees)
- Term: 25 years, interest-only
- Interest: Fixed for 2 years, then variable
- Repayment Strategy: Sale or refinance of the property
- Security: First legal charge over the investment property
- Borrower: Limited company (SPV)
- Guarantor: Director and sole shareholder of the company
We arranged a same-day remote legal advice call with the client via secure video link. During the meeting, we:
- Verified his identity using original documents
- Advised him clause-by-clause on the contents of the personal guarantee
- Explained that the guarantee was unlimited, uncapped, and continuing
- Confirmed that he understood the risks and implications of enforcement
- Discussed possible protection mechanisms, including documentation of director loans or equity injection
- Explained the effect of insolvency, refinance, or share sale on the continuing liability
After the call, we completed the lender’s required ILA certificate and returned it the same day—ensuring the lender’s drawdown deadline was met and the completion proceeded as scheduled.
The Outcome
- Client received full independent legal advice from a qualified solicitor
- All risks were clearly explained, including exposure beyond the loan amount
- ILA certificate was signed, verified, and returned within 24 hours
- The mortgage offer remained live, avoiding any lender delay
- The client proceeded with the transaction fully informed and protected
Why This Case Matters
Many directors mistakenly assume that personal guarantees for limited company borrowing are symbolic, or that they only apply if something “goes wrong.”
In reality, a personal guarantee is often:
- Unlimited in amount and duration
- Enforceable without warning
- Unaffected by changes to the company’s structure, performance, or even existence
If not properly advised, a director may unwittingly risk personal bankruptcy, enforcement against their family home, or the inability to recover personally loaned funds.
Why Use Fast ILA for Director Guarantee Advice?
We regularly advise directors, landlords, and investors who are:
- Signing personal guarantees for limited company buy-to-let mortgages
- Entering into indemnities for development or bridge finance
- Being asked to confirm understanding of unlimited liability clauses
- Required to provide ILA certificates by lenders before completion
Our service includes:
- Same-day appointments with SRA-regulated solicitors
- Fixed-fee pricing — no hourly rates, no surprises
- Full legal review of the lender’s mortgage and guarantee documentation
- Lender-compliant ILA certificates accepted by all major banks, specialist lenders, and private funders
Book Your ILA Appointment Instantly
If you’ve been asked to sign a personal guarantee, don’t proceed until you’ve received proper legal advice. Fast ILA ensures that:
- You understand what you’re signing
- You’re protected before you commit
- The lender gets what they need—on time
We offer three levels of service to suit your needs:
- Urgent ILA – Same-day service for urgent completions
- Couple ILA – For joint directors or married co-guarantors
- Standard ILA – Flexible booking at your convenience
Book online now using our instant booking calendar. Upload your documents and choose a time that works for you.
