Impact of personal guarantee

[Blacky]

I'm considering giving a personal guarantee and was wondering what impact this has on my personal borrowing capacity?

Cheers
Blacky

 

[D.T.]

I've heard some lenders will count the whole loan as your's (since it could potentially be the case)

 

[Colin Rice]

I've heard some lenders will count the whole loan as your's (since it could potentially be the case)

Lenders always assume the worst case scenario, that is if the borrower defaults and cant pay the loan then you as the guarantee will be deemed responsible for the repayments.

Other lenders will factor the entire loan into the equation when it comes to calculating your serviceability.

 

[Rolf Latham]

context is relevant

Your company or trust loan ?


or provision of a SERVICING guarantee to an outside party ?

ta

rolf

 

[Blacky]

context is relevant

Your company or trust loan ?


or provision of a SERVICING guarantee to an outside party ?

ta

rolf

Good question. The borrowing entity is yet to be determined. Potentially it could be a company/trust.

Does it make a difference?

Blacky

 

[Kinnon Bell]

Good question. The borrowing entity is yet to be determined. Potentially it could be a company/trust.

Does it make a difference?

Blacky

I think what Rolf was getting at was are you signing a Director's Guarantee as director of your own company for borrowings in your own personal name/entity or giving a guarantee to a third party who is not yourself.

 

[westminster]

I'm considering giving a personal guarantee and was wondering what impact this has on my personal borrowing capacity?

Cheers
Blacky

Guaranteeing for your own Trust/company is ok. Guaranteeing for a parent/sibling/friend will bite you. Yes it will affect your borrowing capacity negatively.

 

[Blacky]

Ok - I think it will sting me. Even if we put the borrowing entity as a Co/trust the servicing will be guaranteed by my income.

Thanks

 

[Terry_w]

For servicing a guarantee will generally be treated as if you took the loan out yourself.