Personal Guarantee Legal Templates
Download professional legal templates for personal guarantees in Canada.
What is a Personal Guarantee?
Personal guarantees are a type of guarantee used in personal loans and mortgages. A personal guarantee is an agreement that states the guarantor will take responsibility for paying back the loan if the borrower does not pay it back on time. The guarantor’s creditworthiness is usually taken into account when determining how much money they can borrow, or what interest rate they may be given. For this reason, many people decide to ask friends or family members to co-sign their mortgage with them because this improves their chances of getting approved.
Why Do You Need A Personal Guarantee?
In the event that you are unable to pay a debt, your guarantor is legally obligated to do so. If you have a personal guarantee on any assets or credit lines, in case of default, the creditor could seize those assets and sell them off as well. It’s important to make sure that you only enter into personal guarantees when they’re absolutely necessary – for instance if someone is applying for financing on their home mortgage but has bad credit history you might not want to guarantee the loan without collateral.
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Personal Guarantee FAQ
What is a guarantee?
A guarantee is a contract where the guarantor agrees to be financially responsible for agreed-upon debts. If the debts default then the guarantor must settle the debt.
What is limited guarantee?
Limited guarantee reduces the guarantor’s liability by including terms or limits on the total risk.
Is A Personal Guarantee Legal?
Yes. Once the contract has been signed the guarantor is obligated, legally to pay if the loan defaults. If the debt isn’t paid legal action can be taken.