For family-owned property portfolios, debt is rarely anonymous. Lenders want not just bricks and mortar as security, but also accountability from the people behind the business. That accountability often comes in the form of personal guarantees (PGs).

In 2025, PGs remain one of the most significant—and sometimes misunderstood—features of property finance. They allow lenders to hold individuals responsible if the borrowing entity defaults. For families, they represent both opportunity and risk. On one hand, PGs unlock access to larger, more flexible facilities. On the other, they tie personal wealth to portfolio performance in ways that can complicate succession.

This article explores how personal guarantees work, how lenders use them in 2025, and what families should consider when managing PGs across generations.

What a personal guarantee really means

A PG is a legal commitment by an individual to cover a debt if the borrowing entity cannot. In family property finance, PGs usually apply when borrowing through a company or SPV. While the company owns the properties, lenders want additional comfort that real people stand behind the debt.

This means that if the portfolio underperforms and the SPV cannot meet repayments, the lender can pursue the guarantor’s personal assets. That might include cash savings, investments, or even personal property, depending on the terms.

It is this personal exposure that makes PGs such a powerful tool for lenders—and such a serious consideration for families.

Why lenders rely on guarantees

Lenders use PGs to bridge the gap between risk and opportunity. For a bank, property collateral alone is not always enough. Tenants can default, values can fall, and enforcement can be costly. A PG reassures lenders that borrowers are personally committed to making the facility work.

In 2025, lenders have three main motivations for requiring PGs:

• Alignment of interests. PGs ensure borrowers are motivated to keep the portfolio healthy.

• Recovery options. If the borrowing entity fails, the lender has recourse beyond the asset itself.

• Risk pricing. Facilities with PGs may be priced more competitively, since lenders perceive lower risk.

As noted in Private Bank Mortgages Explained, some private banks are willing to flex on PGs where broader wealth relationships exist. But across the market, guarantees remain the default expectation.

Guarantees across generations

For family portfolios, PGs create intergenerational complexity. If the parents are guarantors today, what happens when control passes to the children? Lenders will usually require new PGs from those stepping into ownership or management. But timing, liability, and fairness are not always straightforward.

Consider an SPV owned by siblings. If one is actively involved in the property business and another is not, should both sign PGs? What if one has more personal wealth at risk? These are not just family questions—they are lender concerns.

From the lender’s perspective, the more guarantors, the stronger the security. From the family’s perspective, multiple PGs can create tension, especially if liability is unevenly distributed.

This is why families are increasingly building PG strategies into their succession planning. It’s not enough to transfer shares; they must also decide who carries the personal risk, and how it aligns with ownership and reward.

Example scenario: a generational handover

Imagine a family portfolio held within an SPV. The parents are directors and personal guarantors. Their two adult children are shareholders but not yet guarantors. When the parents plan retirement, the lender insists the children provide PGs before releasing the parents.

If the children hesitate, the facility may be at risk. If one child is more engaged than the other, questions arise about fairness: should both provide guarantees equally? Should ownership be adjusted to reflect liability?

Handled proactively, these issues can be addressed years in advance. The children can be introduced as directors and guarantors gradually, giving the lender comfort and the family time to rebalance equity. Left too late, the lender may withhold consent or demand changes under pressure.

Negotiating the scope of guarantees

Not all PGs are the same. Some are limited, capping the liability to a specific amount or percentage. Others are unlimited, exposing guarantors to the full debt if required. Families should pay close attention to these terms.

In 2025, specialist lenders are often willing to set limits, especially for professional portfolios with robust rental cover. Private banks may also negotiate softer guarantees, sometimes linked to liquid assets held with the bank. By contrast, high street lenders tend to take a more rigid stance, insisting on broad coverage as standard.

The key is negotiation. A strong broker can often secure capped PGs, carve-outs, or release provisions once certain conditions are met. Without these protections, families risk over-exposing personal wealth unnecessarily.

Common mistakes families make with PGs

Families often underestimate the long-term impact of PGs. Common pitfalls include:

• Assuming PGs end automatically. Guarantees usually remain until formally released, even if ownership changes.

• Overlapping guarantees. Families sometimes provide multiple PGs across different facilities, creating compounded exposure.

• Failing to rebalance ownership. If only some family members carry PGs, but others share equally in profits, resentment can build.

• Neglecting succession planning. If heirs inherit ownership without preparing to assume PGs, lenders may trigger refinancing clauses.

These mistakes rarely cause immediate problems, but they surface when families can least afford distractions—during inheritance, refinancing, or market stress.

Mitigating personal risk

Families can’t always avoid PGs, but they can manage them. Practical strategies include:

• Aligning equity and liability. Those who guarantee debt should hold ownership stakes proportionate to their exposure.

• Insurance. Specialist policies can protect guarantors against certain risks, though these need careful evaluation.

• Gradual transitions. Introducing the next generation as guarantors while parents remain in place can smooth lender approvals.

• Regular reviews. PGs should be reassessed during refinances, restructurings, and major family events.

Ultimately, PGs are about trust—both between lender and borrower, and within the family itself. The most successful portfolios treat guarantees as part of governance, not as an afterthought.

Lender trends in 2025

The market shows several trends around PGs this year:

• Increased stress testing. Lenders are modelling not only the portfolio but also guarantors’ personal wealth.

• Digital tracking. Credit bureaus and open banking tools make it easier for lenders to assess guarantors’ capacity in real time.

• Flexibility for scale. Larger portfolios with professional management sometimes secure partial waivers, especially if overall LTV is conservative.

• Private bank integration. For wealthy families, PGs may be offset by investment assets held with the same institution, creating a more holistic relationship.

These trends mean families need to be more deliberate. PGs are not disappearing—they are evolving.

The long-term view

For families building intergenerational portfolios, PGs are both an enabler and a responsibility. They open doors to lending that might otherwise be unavailable, but they also tie personal wealth to portfolio outcomes.

The key is not to avoid PGs but to understand them, negotiate them, and align them with family governance. If heirs are expected to inherit assets, they should also understand the liabilities—and be prepared to share them. For lenders, this clarity is reassuring. For families, it prevents surprises.

In short: PGs are not just a legal formality. They are a strategic choice.

How Willow Can Help

At Willow Private Finance, we help families navigate the complexities of personal guarantees. That means explaining what they mean in practice, negotiating terms with lenders, and ensuring PGs align with ownership and succession plans.

Because we are independent and whole of market, we can approach specialist lenders, high street banks, and private banks to secure terms that fit your family’s strategy. Whether you need capped guarantees, gradual succession handovers, or integrated private bank facilities, Willow provides the expertise to balance lender requirements with family stability.

Frequently Asked Questions

What is a personal guarantee in property finance?
A personal guarantee is when an individual promises to repay the loan if the borrowing entity (e.g., SPV or trust) cannot. It gives the lender recourse to personal assets in default.

Why do lenders demand personal guarantees, and when do they push back?
Lenders often require guarantees to reduce risk, especially where the asset or structure is complex or vulnerable. They may push back if net worth is marginal, exposures are unclear, or guarantees impose legal/tax complexity for family members.

Do guarantees bind multiple generations?
Sometimes, yes — in family structures guarantees may be passed or required across generations. That’s dangerous unless liability, control, and exit rights are clearly documented in advance.

How can guarantee exposure be limited without undermining the loan?
You can cap liability, include sunset clauses, limit guarantee to certain events, require buyout clauses, or ringfence personal assets. Legal structuring and clear terms are key to preventing open-ended risk.



How does Willow help clients navigate guarantees across the family?
We analyse net worth, design guarantee levels, include exit mechanics, map liability allocation, and integrate guarantee frameworks into lender-friendly structures so no generation is unfairly overexposed.

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