Most company borrowers will be required by their lender to provide director Personal Guarantees, especially if the company has been formed purely to as a vehicle to purchase the property and has no other assets.
The personal guarantee provides another level of security for the financial institutions or lenders to protect themselves when providing loans. If the loan is not repaid to the lender by the company, then the company directors’ personal assets may be at risk as they become liable for the relevant business debt that is covered by the guarantee.
It is extremely important to obtain legal advice before signing any guarantees, so you are sure of the scope of them, the repayment terms and when they can be enforced. The guarantor takes on the same liability for the loan as the company and the lender can usually pursue the guarantor as if the loan was made with them directly.