Director's Personal Guarantee — Independent Legal Advice
ILA for buy-to-let limited company mortgages and commercial property finance — accepted by all major UK lenders
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Same-Day Video Appointments
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Accepted by 150+ Lenders
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SRA Regulated
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Fixed Fee from £150 + VAT
✔ Online
Poppy LLB
Solicitor
✔ Online
Zain
Solicitor
✔ Online
Mohsin
Solicitor
How Can We Help You?
Please supply us with:
- A copy of the personal guarantee or Deed of Guarantee
- Your buy-to-let mortgage offer or facility letter
- Names of all directors signing the guarantee
- Contact details of the lender's conveyancing solicitor
- Your preferred appointment time
A Director's Personal Guarantee is a formal undertaking in which a company director becomes personally liable for the financial obligations of their company. When you buy property through a limited company — typically a Special Purpose Vehicle (SPV) set up specifically to hold buy-to-let property — the lender will require this guarantee as standard. Without it, the company alone would provide the security, and a limited company offers (as the name suggests) only limited liability.
The lender's logic is straightforward: if the company defaults and the property is repossessed and sold for less than the outstanding mortgage debt, the lender wants someone they can personally pursue for the shortfall. By signing the personal guarantee, you — the director — become that someone. Your home, your savings, your other investments — all of these can ultimately be pursued by the lender if your company cannot meet its obligations. Independent Legal Advice is a mandatory condition of nearly every UK limited-company buy-to-let mortgage offer, following the principles in Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44.
Why Lenders Require Personal Guarantees on Ltd Co Buy-to-Let Mortgages
Lending to a limited company is fundamentally different from lending to an individual. The company is a separate legal entity, and its directors' personal assets sit outside it. To bring the directors' assets back within reach, lenders use the personal guarantee — and they require ILA to ensure the guarantee is genuinely enforceable.
Your Personal Exposure as Guarantor
- Your home is at risk — the lender can pursue you personally for any shortfall on repossession
- Guarantees are usually 'on demand' — payable immediately the lender calls them, without the lender first exhausting the company's assets
- Joint and several liability — if there are multiple director-guarantors, the lender can pursue any one of you for the full amount
- Continuation — most guarantees remain in force until expressly released, even after you sell shares or resign
- All-monies coverage — some guarantees cover all present and future borrowing by the company from that lender, not just the initial mortgage
- Interest, costs and charges — your liability is rarely limited to the headline loan amount
What We Cover in Your ILA Appointment
1. The Scope and Amount of Your Guarantee
We will identify exactly what you are guaranteeing: a specific mortgage advance, all monies owed to the lender, or something in between. We will tell you the maximum amount the lender can pursue you for — including default interest, costs and charges — and how long the guarantee remains in force. Many directors are surprised by how broad their guarantee actually is.
2. The Property and the SPV Structure
We will discuss the property being purchased, the SPV used to hold it, and how the lender's security operates across both. SPVs typically require the SIC code 68100 (buying and selling of own real estate) or 68209 (letting and operating of own or leased real estate). We will confirm the structure meets the lender's criteria.
3. Multiple Directors and Joint & Several Liability
If two or more directors are guaranteeing the same mortgage, we will explain how joint and several liability works in practice — the lender can pursue any one of you for the full amount, not split the claim evenly. This matters most where directors have unequal personal wealth, where one director may be pursued first.
4. Comparison with Personal Buy-to-Let
If you are weighing whether to use a limited company structure at all, we can outline the trade-offs against personal buy-to-let — tax treatment under Section 24, mortgage rate differentials, set-up and ongoing administration costs. While we are not tax advisers, we can flag the key issues and refer you to specialist accountants.
5. The Specific Lender's Documentation
We work routinely with The Mortgage Works, Paragon, Kent Reliance, Landbay, Foundation Home Loans, Precise, Aldermore, Shawbrook, Fleet Mortgages, Kensington, BM Solutions, Vida, Zephyr, Molo and most other major UK BTL specialists. We know each lender's specific Deed of Guarantee, their certificate requirements, and any unusual clauses. This familiarity speeds things up dramatically.
6. Protective Steps You Can Take
We will discuss steps to protect yourself: ensuring the lender pursues the company first where possible, requesting capped or limited guarantees on smaller facilities, and the merits of Personal Guarantee Insurance (a product we do not sell but can explain). For larger transactions, we will identify any negotiation points worth raising with the lender via your broker.
7. Continuation Provisions and Future Exit
If you may exit the company in future — selling your shares to a co-director, or stepping back from active involvement — we will identify how the guarantee continues and what you need to do to obtain formal release from the lender. Directors who skip this step often find themselves liable for the company's debts years after they thought they'd cleanly exited.
8. The Certificate of Independent Legal Advice
If, after our advice, you choose to proceed, we issue the formal Certificate of Independent Legal Advice required by your lender. We use the specific certificate format each lender prefers — many lenders provide their own template, and we know how to handle each.
Frequently Asked Questions
Why does my lender insist on a Director's Personal Guarantee for a buy-to-let mortgage?
Limited companies offer limited liability — meaning the directors' personal assets are not normally at risk if the company fails. Lenders use personal guarantees to bring those personal assets back within reach if the company defaults on the mortgage. This is standard practice across virtually every UK specialist buy-to-let lender, including The Mortgage Works, Paragon, Kent Reliance, Aldermore, Shawbrook, Landbay, Foundation Home Loans, Precise, Fleet Mortgages and others.
What's the difference between a Director's Personal Guarantee and a Director's Loan Account?
These are completely different things. A Personal Guarantee makes you personally liable for the company's debts. A Director's Loan Account simply records money you have lent to (or borrowed from) your own company — it has tax implications but does not generally create personal liability for the company's other debts. We will explain both during your ILA appointment if either applies.
Can I refuse to give the personal guarantee?
You can refuse — but the lender will almost certainly refuse to advance the mortgage. For ltd co buy-to-let mortgages with specialist lenders, director guarantees are effectively non-negotiable. The points worth raising with your broker tend to be around the scope of the guarantee (specific facility vs all-monies) and any cap on liability, rather than whether to give one at all.
If there are two directors, can the lender pursue just one of us?
Yes — and they typically will. Joint and several liability means the lender can pursue any one director for the full amount of the guarantee, not split it 50/50. They will normally start with whoever has the most accessible personal assets. This is particularly important to understand if the two directors are also a married couple, where one may be on PAYE income and the other self-employed.
My company is an SPV with no other activity — does that change anything?
Not for the purpose of the guarantee. Even a brand-new dormant SPV created solely to hold one buy-to-let property requires its directors to sign personal guarantees. Some lenders may relax other criteria for SPVs (such as minimum trading history), but the guarantee requirement is universal.
Can my partner (a non-director) be required to give a guarantee?
Possibly — if your partner is a shareholder, lives in a property used as security, or is otherwise connected. Where this applies, your partner will need separate Independent Legal Advice from a different solicitor (not us if we are advising you). This is to comply with the Etridge principles around undue influence between spouses.
What is an 'all monies' guarantee and is it more dangerous?
An all-monies guarantee covers every debt the company owes the lender — present and future. If the company later borrows more from the same lender (a second buy-to-let property, an overdraft facility), your guarantee automatically extends to that new borrowing. By contrast, a specific guarantee is limited to one facility. All-monies guarantees are the lender's preference; specific guarantees are the borrower's preference. We will identify which yours is.
How does my personal guarantee interact with a debenture or fixed/floating charge?
On larger or commercial facilities, the lender may also take a debenture over the company's assets — a fixed and floating charge over everything the company owns. The debenture lets the lender appoint administrators or receivers over the company directly. Your personal guarantee operates in addition to (not instead of) the debenture. We will explain both if both apply.
If I sell my shares or resign as a director, am I released from the guarantee?
Not automatically. Most guarantees expressly continue in force until the lender releases you in writing. Always demand formal release as a condition of any company exit — and check the wording carefully. We have seen many former directors discover years later that they are still on the hook for their old company's mortgage debts because nobody asked for release at the exit.
Can I limit my personal guarantee to a specific amount?
Sometimes. For smaller commercial facilities, some lenders accept a capped guarantee — typically limited to £50,000, £100,000 or a percentage of the loan. For mainstream specialist BTL mortgages, capped guarantees are rare. We will identify what's negotiable and what isn't, but actual negotiation with the lender needs to go via your broker.
How quickly can you provide ILA before my mortgage completion?
We offer same-day and next-day video appointments. The video meeting typically takes 15–30 minutes. Once you've signed the Deed of Guarantee with wet ink and posted it to us, we certify and dispatch it to the lender's solicitor the same day it arrives. Total turnaround from first contact to certificate dispatch is usually 1–3 working days.
Do you provide ILA to multiple directors of the same company in a single appointment?
Each director must receive ILA separately and individually — that's a fundamental requirement of Etridge compliance. We can arrange back-to-back appointments for multiple directors of the same company, but each appointment is conducted privately with that director alone. The certificate is issued individually too.
Areas we do not currently assist with
Please note that Lawyers Online is not currently able to provide Independent Legal Advice on the following matters:
- Equity Release & Lifetime Mortgages — including all Equity Release Council products
- Transfer of Equity — including transfers between spouses on marriage or divorce, and other change-of-ownership transactions
If your matter falls into one of these categories, we recommend contacting an SRA-regulated solicitor who specialises in that area, or your local Citizens Advice for a referral.
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Lenders & Companies We Work With
