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Will the lender require a personal guarantee?

What is a Personal Guarantee?

With a homeowner mortgage, you always guarantee the loans in your name. However, with a Limited Company Buy-to-Let, the company acts as its own legal entity. Therefore, a mortgage lender will require you to sign a Personal Guarantee, holding you personally accountable if you fail to pay the mortgage.

When is a Personal Guarantee required?

Always - when buying property in an SPV Limited Company, the directors and shareholders are required to sign personal guarantees.

However, while a personal guarantee requirement is compulsory, it is sometimes waived in exceptional cases where the Loan-to-Value (LTV) ratio is very low. In such cases, a charge on the company as a whole may be taken - through this is a rare occurrence.

Asking a lender to take a risk by lending you the money, but requesting that they not give those same guarantees personally. It always raises questions, it's only in extreme circumstances that the requirement is waived.

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What Does This Mean for You?

The lender requires a minimum 15% deposit as a safety buffer first. However, a personal guarantee is a backstop in case the asset depreciates or payments are missed. Therefore, offering a personal guarantee may be seen as a medium risk, with the personal guarantee released on full repayment to the lender (such as selling the property).

A personal guarantee gets around the "limited liability" that an LTD Company typically offers and puts you, the shareholder/director, on the line for the debt.

Allowing a mortgage lender to assess your circumstances, your income and your assets. It has reassured them that in the event of a default, they can pursue any unpaid amounts from you.

As a general rule, the few lenders that offer "no personal guarantee BTL Mortgages" will require 60% LTV or less. With equity in the property, the lender can feel secure that they will get their funds back in the event of a default.

Lowest Limited Company SPV Buy-to-Let (BTL) Mortgage Rates

Rate
Fees
5.24%
5 Years Fixed
5.43%
5 Year Fixed
5.44%
5 Year Fixed
5.49%
5 Years Fixed
3.99%
2 Years Fixed
  • 3% Arrangement Fee.

The mortgage products shown are for illustrative purposes only and were generated 26 minutes ago. Always consult an independent financial advisor before proceeding with any mortgage. The figures are based on a £142858 property value, a £100000 loan amount and £42858 deposit. A Initial Fixed Rate on a interestOnly loan, and a 25-year mortgage term.

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Rate
Fees
5.43%
5 Year Fixed
5.44%
5 Year Fixed
5.49%
5 Years Fixed
3.99%
2 Years Fixed
  • 3% Arrangement Fee.
5.44%
5 Year Fixed
  • £199.00 Application Fee.

The mortgage products shown are for illustrative purposes only and were generated 26 minutes ago. Always consult an independent financial advisor before proceeding with any mortgage. The figures are based on a £133334 property value, a £100000 loan amount and £33334 deposit. A Initial Fixed Rate on a interestOnly loan, and a 25-year mortgage term.

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Rate
Fees
5.99%
2 Years Fixed
6.04%
5 Years Fixed
4.93%
2 Years Fixed
  • £150.00 Application Fee.
  • 2.5% Arrangement Fee.
3.93%
2 Years Fixed
  • £150.00 Application Fee.
  • 4.5% Arrangement Fee.
2.93%
2 Years Fixed
  • £150.00 Application Fee.
  • 6.5% Arrangement Fee.

The mortgage products shown are for illustrative purposes only and were generated 26 minutes ago. Always consult an independent financial advisor before proceeding with any mortgage. The figures are based on a £125000 property value, a £100000 loan amount and £25000 deposit. A Initial Fixed Rate on a interestOnly loan, and a 25-year mortgage term.

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Rate
Fees
6.14%
3 Year Fixed
  • £195.00 Assessment Fee.
  • 2% Arrangement Fee.
6.19%
6 Year Fixed
  • £195.00 Assessment Fee.
  • 2% Arrangement Fee.
6.39%
3 Year Fixed
  • £195.00 Assessment Fee.
  • 2% Arrangement Fee.
6.39%
6 Year Fixed
  • £195.00 Assessment Fee.
  • 2% Arrangement Fee.

The mortgage products shown are for illustrative purposes only and were generated 26 minutes ago. Always consult an independent financial advisor before proceeding with any mortgage. The figures are based on a £117648 property value, a £100000 loan amount and £17648 deposit. A Initial Fixed Rate on a interestOnly loan, and a 25-year mortgage term.

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Get in touch

We are your online mortgage broker, offering you the convenience of applying for a mortgage online. However, we understand that sometimes you may prefer to speak with a human - phone, email or in person.

Phone number
01133 205 902
Email
hello@cyborg.finance
Postal address

31 Bradford Chamber Business Park,

New Lane, Bradford, BD4 8BX

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FCA Authorised

We are authorised and regulated by the Financial Conduct Authority (No. 919921). The FCA does not regulate most Buy to Let mortgages.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

British Company

Cyborg Finance Limited is registered in England and Wales (No. 12131863) at Bradford Chamber, New Lane, Bradford, BD4 8BX

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