Mortgage insurance initiative aimed at professional landlords at risk

A new personal guarantee insurance protection service has been launched for professional landlords - triggered by a surge  in incorporation.

Purbeck Personal Guarantee Insurance claims that as many as 74 per cent of recent buy to let mortgages have been taken out by limited company structures.

And it says that professional landlords using such structures are commonly asked to sign a personal guarantee as a condition of the mortgage.  

This provides the mortgage lender with direct recourse to the professional landlord’s personal estate should the landlord fall into arrears and there is a shortfall following property repossession by the bank.  

This scenario could become increasingly likely if property prices keep falling, claims Purbeck. 

It says its product will cover 80 per cent of an outstanding mortgage if repayments fall into arrears and the lender seeks to take action to recover the property.

Part and parcel of insurance cover is access to Purbeck’s Support Desk when a Professional Landlord is facing financial distress, providing access to expert financial advice and mentoring support to help prevent repossession of a property.

Managing director Todd Davison says: “Mortgage advisers will be aware of the personal guarantee risk associated with mortgages taken in limited company structures but there have been few options when advising clients on the ways they can limit that risk. 

“Now, for the first time, advisers can offer Personal Guarantee Insurance as a solution to that challenge. Our introductory process is very simple and a dedicated portal allows advisers to keep track of applications.”

Purbeck says it’s supported over 2,000 directors on over £275m of Personal Guarantee commitments over the past six years in respect of business loans.