Guarantee to Lender relating to Mortgage Loan

Neutral with Indemnity

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A standard deed / contract of guarantee is given to a Lender in return for the grant or to continue to grant the Loan to the Borrower. This is drafted in Neutral Form.

The Guarantor requests the Lender to grant or to continue to grant the Loan to the Borrower. With a view to obtaining the Lender's Loan to the Borrower, the Guarantor has agreed at the request of the Lender to give a guarantee and indemnity in respect of the obligations and liabilities of Loan as are set out in the Schedule to this Guarantee.

The Guarantee is only a recommended form of guarantee and indemnity. In deciding whether to adopt the Guarantee, the mortgage lender should consider whether the Guarantee is compatible with its operational procedures and the complexity of the loan transaction. The use of the Guarantee for any mortgage transaction is entirely voluntary by the mortgage lender and the guarantor.

The Guarantee provides a guarantee and indemnity in respect of mortgage loan(s) granted by the mortgage lender by way of facility agreement(s) and secured by a charge over the mortgaged property (details of the facility agreement(s) and the mortgaged property are set out in the Schedule to the Guarantee). However, one distinctive feature of the Guarantee is that the guarantor’s liability is limited to the specified amount of the mortgage loan plus interest, costs and expenses.

If the Guarantor signs this Guarantee, the Guarantor will become liable instead of, or as well as, the Borrower under the Mortgage for:

(a) the amount of the Loan owing by the Borrower;

(b) the amount of any Additional Loan the Lender lent the Borrower with the Guarantor's approval;

(c) all costs and expenses payable by the Borrower under the Mortgage;

(d) the Expenses payable by the Guarantor under this Guarantee; and

(e) all interest, default interest, late charges and other charges charged on any of the above sums.

The Guarantor will be required to pay immediately under this Guarantee on written demand from the Lender.

This Guarantee is a guarantee and an indemnity of the full amount of the Debt and the Expenses. However, the Guarantor will not be liable to the Lender under this Guarantee for any Additional Loan unless the Guarantor has given the Guarantor's written approval to the Additional Loan being made, or unless the Guarantor later agree in writing to be liable for it.

The Lender may still make the Additional Loan to the Borrower even if the Guarantor has not given the Guarantor's written approval to the Additional Loan being made. If the Lender does so, this will not affect the Guarantor's liability to repay the Debt (not including that Additional Loan) to the Lender.

Document Type:

Deed /poa / authorisation / agency / escrow


Business > Banking and Finance > Letter of Comfort / Guarantee and Indemnity
















contract of guarantee




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