Personal Guarantees

Have You Personally Guaranteed a Debt?

A lot of parents today are being asked by their children to act as a guarantor to their loans. You justed wanted to help them get into their own Property BUT did you understand the guarantee documents the lender was asking you to sign?

In effect, if the Borrower can’t repay the loan to the Bank, then YOU as Guarantor are left with that responsibility (together with any extra interest and fees that the Bank is entitled to charge under their loan documents). There’s some great information you can find at

What Happens if the Bank has changed the Loan Conditions?

In the case of Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15, it was decided that a guarantee is no longer effective if the lender changes the obligations under the guarantee eg. extending the time to repay the loan unless:

* the Lender first gets the Guarantor’s consent; or
* the Lender can prove that the change obviously benefits the guarantor AND does not expose the guarantor to any increased risk or liability

As the High Court put it in Ankar, the mere possibility of any detriment to the guarantor from an alteration of the original credit contract is enough to discharge the guarantee.

If you think the loan you guaranteed has changed without your consent, call Lighthouse Law Group on (02) 9744 9236 to arrange a meeting. We can investigate any changes and work out a release from your obligations.