Independent legal advice for Mortgages

At SettleHub, we provide you independent legal advice keeping you fully aware of your rights and obligations as a guarantor to a loan. In issuing Solicitor's certificates, our experts will carefully analyze your loan agreement guiding you through, to understand the nature and consequences of your guarantee.

When do you need Independent Legal Advice?

Bank loan

In obtaining a loan, a lender may insist that either you as the borrower or a third party on your behalf guarantees the repayment of the loan. Should such a request be made, the lender will insist that the guarantor obtains independent legal advice, to ensure that the guarantor is fully aware of the legal consequences of the guarantee they are providing. This step can be very important in ensuring that the loan is admissible, as a loan may be struck down where a party was “unduly influenced” to become a guarantor and did not receive independent legal advice.

 

If such a request is made, you must provide the lender with a Solicitor’s Certificate, attesting that you have received independent legal advice.

When could you be a guarantor to a loan?

  1. Guaranteeing a loan taken by a family member or business associate

    • A child, a sibling or a business associate may be looking to obtain a loan, and the lender may seek additional security in the form of a guarantee.

  2. Guaranteeing a commercial loan obtained for business purposes

    • In obtaining finance for commercial purposes, the lender may seek that the Director provides a personal guarantee over the finances. This is common practice when the borrower is a corporate entity.

    • In some instances, the spouse of the director may also need to provide a guarantee, particularly where the family home or another asset owned by the couple is pledged as security for the loan.

  3. Obtaining private lending for property developments  

    • If you are a small-scale developer and are seeking to obtain short term funding from a private lender, you as an individual, will often be asked to guarantee the repayment of the loan personally.

    • This is because these types of loans can only be provided to companies and not individuals. Therefore, in order to protect their interests, lenders will often seek that you as the director of the company provide a personal guarantee.

  4. Where your property is cross collateralized in the provision of a loan

What is a Solicitor’s Certificate?

In providing independent legal advice, our expert solicitors at SettleHub will take you through the loan agreement to confirm your understanding. We will explain to you the legal risks that you are exposed to in the event the principal borrower defaults under the loan, and guide you towards fully comprehending the consequences of providing the guarantee.

Solicitors must first review the loan contract and the guarantee terms prior to providing legal advice. It is important that you provide these documents at your earliest convenience, as often delays in obtaining the Solicitor’s Certificate will cause the lender to delay in settling the loan.

Once you have been provided with independent advice, our solicitors will issue you with a certificate attesting to this and that you accept the risks associated with the guarantee.

 

Guaranteeing a loan can be an extremely risky endeavour. If you are considering guaranteeing a loan, contact us at SettleHub to receive expert advice that places you in the best position to make an informed decision.

FAQs on Independent Legal Advice

  • A guarantor is a person that assures the performance of the borrower to a loan agreement. In the event that the borrower defaults in their repayment of the loan, the guarantor is obligated to repay the amount owed.

  • As a guarantor, you do not need to make any cash payments unless and until the borrower defaults in their performance.

  • Being a guarantor on behalf of a loan is not something to be undertaken lightly. If the borrower defaults in their repayments, you will be called upon to make the repayment in their stead.

  • If you are unable to pay the debt, the lender has the ability to sue you in court and make claims against any of your assets, such as your residential home.

  • Lenders often seek that guarantors are individuals who are solvent and have assets in their names.

  • ​​​​​​​You should always seek independent legal and financial advice prior to becoming a guarantor to any loan.

  • It is possible to use the same lawyer. However, the lawyer will advise each of you individually and independently.

  • This means that each party will receive an individual Solicitor’s Certificate attesting to their understanding of the guarantee.

  • However, it is usually advisable to use two different lawyers for the couple.

  • ​​​​​​​Depending on complexity of the loan documents, fees for Solictor’s Certificates range between $660.00 - $1,500.00.