Personal guarantee
A personal guarantee is a legally binding promise by an individual to repay a company's debt if the company does not. When a landlord borrows through a special purpose vehicle, every buy-to-let and bridging lender requires the directors, and usually any shareholder holding 25% or more, to sign one, so that the limited liability the company provides does not shield the borrower from the lender. It is a different thing from a tenant's guarantor, who stands behind rent rather than debt.
What it covers
Most lender guarantees are unlimited, covering the whole loan, interest, costs and any shortfall after the property is sold, and joint and several, meaning each guarantor is liable for the full amount and the lender may pursue any of them. Some lenders cap the guarantee at a percentage of the loan, commonly 20% to 25%, on lower loan-to-value products; ask the broker, because the cap is negotiated at application, not after.
Independent legal advice
Lenders require each guarantor to take independent legal advice from a solicitor who is not acting for the company or the lender, and to sign a certificate confirming it. Where a guarantor's spouse or partner has an interest in the family home, lenders often require separate advice for them too, because the guarantee can reach that property. Budget £150 to £400 per guarantor for the advice and allow a week; it is a frequent cause of delay at offer stage.
Release
A guarantee ends when the loan is repaid, not when a director resigns or sells their shares. A director leaving the company must obtain a written release from the lender, which usually requires a replacement guarantor or a refinance; without it, liability for a company the person no longer controls continues. Guarantees on a bridging loan are released at exit.
What it means for structuring
Because every director signs, adding a spouse or child as a director for tax reasons makes them a guarantor; adding a minor as a shareholder draws refusal outright. Keep the board to the people who accept the liability.
From working with landlords across the UK who have incorporated, the guarantee is the document most often signed without being read; the clause that matters is joint and several, because it means a 20% shareholder can be pursued for 100% of the debt. The lenders' guarantee requirements are compared in the best buy-to-let mortgage lenders and best bridging loan lenders guides, and how to set the company up so the guarantees fall where you intend is in the best SPV formation services for landlords.
Last reviewed: September 2026.
