Why Your Lender Asks for Independent Legal Advice (And How to Make It Simple)
If you’re taking out a loan—whether for your business, a new home, or an investment—you might be surprised when your lender tells you to get independent legal advice. This extra step can feel like just another box to tick, but there’s a good reason for it.
So, why do lenders insist on this?
It comes down to making sure everyone is on the same page. When you sign a loan or act as a guarantor, you’re taking on some serious responsibilities. The lender wants to be sure you know exactly what you’re agreeing to, and that you’re not signing under pressure or confusion. By having a lawyer walk you through the documents, you get a clear understanding of your obligations and risks—before you commit.
From the lender’s perspective, this also helps prevent future disputes. If everyone understands the deal from the start, there’s less chance of misunderstandings down the track.
How can you make this process easier?
Choose a lawyer who specialises in loan and guarantee advice - someone who can explain things in plain English (or Spanish, if that’s easier for you).
Book ahead so you’re not scrambling right before settlement.
Send your documents through early so your lawyer has time to review them.
Write down your questions - no question is too small.
Look for firms (like ours) that offer fixed fees and online appointments - it’s all about making things convenient for you.
What Is a Guarantor’s Certificate and Why Do You Need One?
If you’re being asked to be a guarantor, you’ll probably hear about something called a “Guarantor’s Certificate” or “Independent Legal Advice Certificate.” But what exactly is it?
Here’s the short version:
A Guarantor’s Certificate is a document your lawyer signs after meeting with you to go through the guarantee and loan paperwork. The point is to make sure you really understand what you’re signing up for—because being a guarantor is a big deal. If the borrower can’t pay, you might be on the hook for the whole loan.
Why do you need one?
For your own protection: It’s easy to underestimate the risks of being a guarantor. The certificate means you’ve had a chance to ask questions and get clear answers before you commit.
To satisfy the lender: Most lenders won’t proceed without this certificate. It’s their way of making sure the process is fair and above board.
To avoid future headaches: If there’s ever a dispute, having this certificate can help show you entered the agreement with your eyes open.
If you’re ever unsure about acting as a guarantor, don’t rush—get advice first.
How to Keep Legal Costs Down When Signing a Loan Agreement
No one likes surprise fees—especially when you’re already dealing with loan costs and bank charges. The good news is, there are ways to keep your legal costs reasonable while still getting the advice you need.
Here are some practical tips:
Ask for a fixed fee upfront. Your lawyer should be clear about costs from the start.
Be organised. Send all your documents together and let your lawyer know if you’re working to a deadline.
Prepare your questions. Write down what you’re unsure about so you can cover everything in one go.
Take advantage of online appointments. It saves time and often reduces costs.
Read through your documents first. Even a quick review can help you spot areas you want to discuss, making your meeting more efficient.
Remember, getting the right legal advice is an investment in your peace of mind. With a bit of planning, you can keep the process smooth, affordable, and stress-free.
If you need help with your loan or guarantee documents, at SCL we offer fixed-fee, online legal advice for borrowers and guarantors - making the process clear, convenient, and tailored to you. Contact us at info@southernconnections.law for a confidential discussion.
