Do you require independent legal advice to meet your lender’s requirements?

When borrowing money, your bank or financier may require you to obtain independent legal advice prior to you signing any loan, mortgage or guarantee documents. The primary purpose for this requirement is to assure the bank that you understand the nature and effect of the documents you will be required to sign.


A mortgage is a contract between the lender, usually a bank, and the borrower. When you take out a loan (or borrow money) for the purchase of real estate property, your bank or financier will ask you to sign a loan contract. The lender will also ask you to sign a mortgage document so that it can register a mortgage over the property and hold the original certificate of title to the property as security.

A mortgage is also a security. This means that the lender has the right to take and sell the mortgaged property should the borrower fail to pay any money due or if the borrower fails to comply with his or her obligations under the loan. If the proceeds of sale of your property by the mortgagee (or lender) are not enough to pay out the debt owed to the lender, then the lender can sue you personally for the shortfall.

If you are financing the purchase of property through your company or your self-managed super fund (SMSF), or if you are helping your child purchase his or her first home, you may also be required to sign a guarantee and indemnity document.