Personal Guarantees on Company Mortgages
What is a Personal Guarantee? A personal guarantee is a legal commitment made by an individual—typically a business owner or director—to personally repay a company’s debt if the company is unable to do so. In the context of a company mortgage, this means the individual personally guarantees the repayment of the mortgage loan obtained by the business. Why Do Lenders Require Personal Guarantees? Lenders often request personal guarantees for company mortgages to reduce their risk, especially in cases involving: The personal guarantee acts as an additional layer of security for the lender. Key Points About Personal Guarantees on Company Mortgages Scope of Guarantee: Legal Implications: Types of Guarantees: Risks for the Guarantor Negotiating Guarantee Terms Guarantors should: Alternatives to Personal Guarantees Important Considerations Summary A personal guarantee on a company mortgage is a serious financial commitment. It helps companies secure funding but exposes the guarantor to personal liability. Professional legal and financial advice is strongly recommended before entering into such agreements. Jiten Shah Director, JMS Accounting