When taking out a BTL mortgage 99% of lenders require the directors and possibly shareholders to personally guarantee the mortgage.
This guarantee needs witnessing from a solicitor who must explain the legal implications of the document. This is called Independent Legal Advice (ILA).
A lot of brokers do not mention this process so when it comes to signing in front of a solicitor there can be a big surprise. We have seen some fees as high as £800 to witness one document!
There can be a choice though as lenders fall into these categories:
- ILA always required
- ILA can be dispensed with under certain circumstances. Usually when the guarantors are the same as the directors
- The guarantee can be witnessed by anybody over the age of 18 who is not related to you or on the same loan
- No Guarantee required
As we move down the list the cost to witness the guarantee reduces to zero and the process is much quicker.
Make sure you are fully aware of the options and costs as there can be significant savings with the right lender.
We always discuss this as part of the legal process. If you require help getting your next Limited Company BTL mortgage please contact us.Tags: ILA, Limited Company BTL, Personal Guarantee, Tips