In this episode, Nick unpacks the concept of personal guarantees in the context of property investment mortgages in the UK. Aimed at newcomers to the property market, Nick explains what a personal guarantee is, how it works, and why lenders often require it from company directors or shareholders. He discusses the implications of signing a personal guarantee, including the potential risks to personal assets and credit scores, as well as strategies to mitigate these risks, such as negotiating terms and seeking independent legal advice.

KEY TAKEAWAYS

A personal guarantee is a legally binding promise made by an individual, typically a company director or shareholder, to be personally liable for the debts of a limited company if it defaults on its mortgage repayments.

Lenders often require personal guarantees from directors or shareholders of limited companies as additional security, especially in property investment where loan amounts can be substantial.

Signing a personal guarantee poses significant risks, including the potential loss of personal assets (like your home) if the company defaults on the mortgage, and it may also impact future borrowing capabilities.

To mitigate risks associated with personal guarantees, individuals can negotiate terms with lenders, consider personal guarantee insurance, and seek independent legal advice before signing.

It is crucial to understand the implications of a personal guarantee and to seek professional legal advice, ideally from a solicitor specialising in independent legal advice, to ensure informed decision-making.

BEST MOMENTS

"A personal guarantee in the context of property investment mortgage in the UK is a legally binding promise made by an individual to be personally liable for the debts of a limited company."

"By signing a personal guarantee, you are agreeing to be personally responsible for repaying the mortgage debt if the company is unable to do so."

"Limited companies have separate legal personality from their owners, which means that if a company goes into liquidation, the owner's personal assets are generally protected."

"Having a personal guarantee in place can affect your ability to obtain other loans or mortgages in the future."

"It's crucial to understand the risks involved and seek professional advice before signing one."

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HOST BIO

Nick is an award winning property investor, voted Fastest Newcomer 2022 by Premier Property, and is an accredited Retrofit EPC Assessor. He sources and renovates properties for himself as well as other investors. While doing this he has developed his own systems for efficient investment, such as developing his own methods to save time when viewing properties and estimating market values and potential returns, costing out renovations.

He spends three months of the year abroad and while there continues his business with use of modern technology and his proven systems.

Location freedom has always been his "Why" for being a Property Investment and has now reached his ideal of the colder months spent in Thailand and the rest of the time in the UK, all while continuing to run his business

This Podcast has been brought to you by Disruptive Media. https://disruptivemedia.co.uk/

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