Independent Legal Advice for Guarantors
Providing a guarantee for someone else’s loan is a significant financial commitment, and lenders in Victoria require you to obtain Independent Legal Advice (ILA) before they will finalise the loan. At Burton Morley Naughton, we provide clear, practical advice so you fully understand the risks, obligations and long‑term consequences of becoming a guarantor — whether for a child, family member, business partner or investment arrangement.
Our property and lending advice is delivered by experienced lawyers who have supported families across Bentleigh, Brighton and the wider Bayside area for decades.
Why Independent Legal Advice is Required
Banks and lenders require guarantors to obtain independent legal advice to ensure:
you understand the financial risks
you are not being pressured or misled
you understand the documents you are signing
you are aware that the bank can pursue you for the full debt if the borrower defaults
We provide a calm, thorough explanation of the guarantee, the loan structure and your exposure, so you can make an informed decision.
Common Situations Where Guarantor Advice Is Needed
Parents guaranteeing a child’s first home loan
Family members assisting with refinancing
Directors providing personal guarantees for business loans
Individuals guaranteeing investment loans
Guarantors required for SMSF lending
Relationship‑based guarantees (e.g., partner or spouse)
Each situation carries different risks, and we tailor our advice accordingly.
What We Cover in Your Appointment
During your Independent Legal Advice appointment, we will:
Review the loan and guarantee documents — including the loan agreement, guarantee, mortgage, and any indemnity clauses.
Verify your Identity - make sure you bring 100 points of ID (for example, a Drivers Licence and Passport) as new legislation requires us to check this.
Explain your financial exposure — including unlimited guarantees, secured guarantees, and how the bank can enforce repayment.
Discuss risks specific to parents guaranteeing children — such as relationship breakdowns, job loss, or future refinancing.
Confirm your understanding and independence — a requirement before we can sign the lender’s certificate.
Sign and certify the lender’s ILA documents — so the bank can proceed with settlement.
We also provide guidance on how the guarantee interacts with your own assets, retirement planning, estate planning and property interests.
Fees
We offer fixed‑fee Independent Legal Advice for guarantors, including review of documents, advice, and signing of lender certificates. Request a quote.
Common Questions About being a Guarantor for a loan
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Being a guarantor means you are legally responsible for the borrower’s debt if they cannot repay it. The bank can pursue you for the full amount, including interest and enforcement costs.
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Lenders require independent legal advice to ensure you understand the risks and are entering the guarantee freely. Without this advice, the bank will not proceed with the loan.
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Yes, if your guarantee is secured against your property, the bank can enforce the mortgage if the borrower defaults. We explain exactly what assets are at risk.
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Some guarantees are capped at a specific amount, while others are unlimited. We review the documents and explain your exposure clearly.
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Release is possible in some circumstances, such as refinancing or significant loan repayment, but it is not automatic. We can advise on your options.
Book an Appointment
If you are being asked to act as a guarantor, it is essential to understand the risks before signing anything. We provide clear, steady advice so you can make an informed decision.