Mortgages and Guarantees

A mortgage is the security over a property that a lender holds in exchange for loaning money to the borrower.

Guarantees vary with the purpose of the loan, but in simple terms, a guarantee requires the guarantor (ie the person who gives the guarantee) to repay the borrower's loan if the borrower fails to comply with the borrower's obligations under the loan.

In many cases, a guarantor will not directly get anything out of a guarantee and faces many risks by giving a guarantee.

Guaranteeing a mortgage, whether for a relative or as a director of a company requires careful consideration of the limitations (if any) that apply to the guarantee. Not all guarantees are the same and where you are considering giving a guarantee, then you may benefit from advice as to whether you can limit the rights of recourse against you.

In addition it may be possible to restructure the purchase such that some other form of security, rather than a guarantee is used to secure the loan.

Please contact us if you have any queries about mortgages or guarantees.