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ILA – The Hidden Costs of a Guarantee

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.

10 Reasons to use Searchlight Finance

Why use a mortgage broker
  1. Support and inform you from initial enquiry through to completion and beyond.

  2. Education service on market in general and 16 years experience of being a landlord.

  3. Take the time to gain a detailed knowledge of your circumstances and aspirations

  4. Provide impartial, expert and external scrutiny of mortgage products.

  5. Identify when your circumstances do not meet the criteria of specific lenders.

  6. Identify the most likely lender in unusual situations, thus avoiding the need for multiple credit checks.

  7. Expert guidance in complex scenarios.

  8. We understand the urgency of some transactions and “Go the extra mile” to meet deadlines.

  9. We work for you and not the lender.

  10. Explain the features and benefits of different options and lenders.

Your property may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.

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