The Exchange Bond® - Simply designed with you in mind

Despite fears of a recession and an uncertain economic environment, many property developers have reported healthy sales during the first few weeks of 2008 suggesting a more promising outlook for the property market this year.

However, while demand continues to be strong, parting with a large cash lump sum at exchange of contracts remains a daunting prospect.

Pioneered and developed by the Exchange Insurance Company (ExCo), the Exchange Bond® has become the recognised alternative to the financial burden of the traditional cash deposit.

Having set the industry standard, the Exchange Bond® is now well-established in the UK, Ireland and internationally, and is fast-becoming a feature of the property buying process for all homebuyers.  Whether for the first-time buyer, the empty nester or the property investor, the Exchange Bond® is a cost-effective, simple and secure product.

The first time buyer
First-time buyers, Amanda Roberts and partner, Karl Nunn, celebrated exchange of contracts on a new three-bedroom house near Newmarket recently, after the Exchange Bond® helped them to meet otherwise difficult financial requirements.

25 year old Amanda explains: “The house we decided to buy at Martingales, Red Lodge, was perfect but we struggled to afford it.  We knew that we could meet the £180,000 mortgage repayments but we simply didn’t have the cash lump sum required to secure the property at exchange of contracts.  We talked this over with the housebuilder, David Wilson Homes. Although they helpfully agreed to take 5% off the property price, we still needed to provide some kind of financial deposit to guarantee that we would not default before completion.”

As with all new property purchases, there is a legal period of 28 days from the initial enquiry to purchase during which prospective homebuyers must guarantee their financial position in order to exchange.  Because of this requirement, Amanda and Karl found themselves racing against the clock to solve their financial dilemma.  

Amanda continues: “Desperate not to lose our dream home, the time constraints were particularly stressful so we were greatly relieved when David Wilson Homes introduced us to the Exchange Bond® - an entirely new concept to us and a real life-saver! 

We spoke to an Exchange Bond® advisor, filled in a brief, simple application form and within a matter of days received confirmation that we had been issued with an Exchange Bond® allowing us to exchange contracts.  The cost to us was a small premium and administration charge totalling about £400 – nothing compared to the 5% deposit we would otherwise have had to pay!”

As a replacement for the traditional cash deposit, the Exchange Bond® - constituted the necessary financial guarantee for David Wilson Homes that the deposit value would be reimbursed if Amanda and Karl defaulted before completion.

This not only enabled them to avoid the initial deposit amount in favour of paying 100% of the purchase price on completion but it also ensured that David Wilson Homes secured their buyer and allowed the exchange process to proceed. 

Frank Speight, ExCo’s Joint CEO, comments: “The Exchange Bond® is a very attractive alternative to making a cash payment on exchange when buying a property.  This is particularly true for first-time buyers for whom an Exchange Bond® can make the difference between making or breaking a property purchase.  With this in mind, we’re delighted for Amanda and Karl since this is the type of situation that the Exchange Bond® was designed to help.”
 
The property investor
Maurice Barrett, a professional residential property investor, had his eye on the Higgins Homes Uber development in Walthamstow.  Already convinced he was going to purchase one of the stylish one-bedroom apartments, Maurice’s discovery of the Exchange Bond® allowed him to purchase two!

Maurice, from Bow in East London explains: “I liked the feel of the Uber development, it is in a very up-and-coming area with great transport links and it will definitely stand to benefit from being in the Olympic zone.  Having already decided to buy one property, I picked up an Exchange Bond® leaflet in the Higgins Homes sales office.  It was the answer to my prayers – using an Exchange Bond® removed my problem of having to put a substantial amount of money down as a cash deposit.”

Maurice continues: “Once I knew I could delay the payment of my deposit until completion – which is in summer 2008, I decided to buy two one-bedroom apartments!  There are two main advantages to the Exchange Bond®.  Firstly, it removed the pressure on me to find immediate funds for a deposit and secondly it allowed me to place my money that otherwise would have been tied-up, in a high interest bank account.  I will definitely be using an Exchange Bond® again – they are the way of the future.”

Frank Speight, Joint CEO of ExCo, says: “The Exchange Bond® is an ideal financial tool for property investors as it allows them to have control and use of funds that would otherwise be tied up as a deposit – sometimes for several years. The Exchange Bond® ensures that these funds can be used elsewhere to generate a further return and ultimately makes a significant difference to how they apply their funds.” 

Authorised and regulated by the Financial Services Authority, ExCo has linked up with an increasing number of well-established and respected housebuilders including Crosby Lend Lease, Oceanico, Higgins Homes, Barrack Homes, Taylor Wimpey and Gladedale Home Counties.

For further information on the Exchange Bond®, please visit: www.exchangebond.com