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TWPN Property Deposit Bond - Product

TWPN Property Deposit Bond - Approvals & Acceptances

TWPN Property Deposit Bond - FAQ

TWPN Property Deposit Bond - Advantages for the Purchaser

TWPN Property Deposit Bond - Advantages for the Developer / Vendor

TWPN Property Deposit Bond - Solictors Brief

What is a TWPN – Property Deposit Bond?

The 'TWPN Property Deposit Bond', also known as a 'Deposit Bond' or 'Exchange Bond', is an insurance contract that serves as an alternative form of payment to cash deposits paid by buyers when securing the 'Right to Buy' a property.

Backed by one of the world's largest insurers, the TWPN Property Deposit Bond is set to transform the way buyers of overseas property fund their investments.

How does it Work?

A Prospective Buyer must first establish that the Seller is willing to accept a property deposit bond. Once this is confirmed, the Buyer completes an application form.

If the application is accepted, TWPN's Insurance Partner will issue the bond to the Seller on behalf of the Buyer at exchange of contracts. The bond acts as a financial guarantee to the Seller, should the Buyer default on completing the purchase of the property.

Who Benefits?

Buyers benefit by NOT having to release equity that is either, unavailable, tied-up or wanted for another purpose.
Sellers benefit by gaining access to a much larger base of potential customers. This is a powerful and compelling sales tool for developers in particular, who can offer potential customers the TWPN Property Deposit Bond instead of a cash discount.

The TWPN Property Deposit Bond is an alternative to paying a cash deposit. It allows you to delay payment of your cash deposit until completion of the purchase, alleviating the need immediately to liquidate your funds and enabling any investments to continue earning interest until completion.

This works by the TWPN Property Deposit Bond guaranteeing to pay the Vendor your deposit at completion in the event of your default.
This does not negate your obligation to pay - you have signed a Sale and Purchase agreement and have to pay the full purchase price at completion. In the event of default the TWPN Property Deposit Bond would pay the developer the deposit amount and the insurer would seek recovery from you.

Example:

• £200,000 GBP 2 bed flat
• 12 month off-plan 
• Typical deposit required after 28 days - £20,000 GBP (10% of Purchase Price) 
• Cost of the BOND - £1,175 GBP for 12 months cover

Purchaser pays £1,175 GBP to purchase a TWPN PROPERTY DEPOSIT BOND which is used in lieu of a cash deposit. Purchaser pays full £200,000 GBP to vendor at completion under the Sale & Purchase.
Avoids Purchaser having to outlay cash or obtain expensive bridging finance to pay the £20,000 GBP 10% deposit on the property purchase.

In which Countries can I use the TWPN Property Deposit Bond?
Out initial “Roll Out” Countries are:

• Australia
• Croatia
• Cyprus 
• Greece
• New Zealand
• Portugal
• South Africa
• Spain
• United Kingdom
• United Arab Emirates 

*We will be adding more countries continually to cover the “Top 100 countries ” within the next two years

Find out all you need to know about TWPN Property Deposit Bond here.

TWPN Property Deposit Bonds – Product:

A TWPN Property Deposit Bond is used by a property buyer as an alternative to paying a cash deposit to the Vendor.  
The TWPN Bond undertakes to pay a specified sum (limited to 10% of the purchase price) to the Vendor at the time of completion in the event that the Purchaser defaults on its payment obligations under the Sale & Purchase agreement. 

Main Features of the Deposit Bond Guarantee:

• Payable upon demand by Insurer to Vendor.
• Available for any amount between £10,000 and £50,000. 
• Available for a period between 6 months and 24 months. 
• Attractive alternative to borrowing funds or liquidating assets to fund deposit. 
• Can be extended for a further premium - for up to 6 months. 
• Tied into the specified Sales & Purchaser contract.

TWPN Property Deposit Bonds – Approvals & Acceptances:

Once approved, we will email you confirmation of approval and your TWPN BOND approval number along with simple instructions, the premium payable and a Bond Issue Checklist of documentation to return to us in order to activate your TWPN BOND.

The TWPN BOND approval will be valid for 30 days

TWPN Property Deposit Bonds – FAQ:

What is a TWPN Property Deposit Bond?

A Property Deposit Bond is used by the Purchaser as an alternative to paying the Vendor a 10% cash deposit under a property Sales & Purchase Agreement. The TWPN Bond undertakes to pay a specific sum to the Vendor at the time of settlement (i.e. completion) in the event that the Purchaser defaults on its payment obligations under the Sales & Purchase contract

How much does it cost?

Premium is based on the amount and term of the bond, but is typically around 5% pa of the deposit

Who can apply?

Private buyers of residential homes, private buyers of investment properties and larger corporate property investors can all apply for deposit bonds – application and acceptance is subject to qualifying criteria.

Who benefits from the TWPN bond?

Both the Purchaser and the Vendor benefit from avoiding the requirement for a cash deposit. Purchaser is able to keep investments earning and avoid the expense of bridging finance. A TWPN Bond can also protect the Purchaser against the possibility of losing the cash deposit in the hopefully unlikely event of the builder / developer going into insolvency before completion of the property – in that the Bond cannot be claimed upon unless the property has been completed and then only as a result of the Purchaser’s failure to complete the purchase contract.
The Vendor can sell more homes more easily. The Property Deposit Bonds provides the Vendor with confidence that if the Purchaser will does not complete the purchase the Vendor can call for payment under the TWPN Bond.

Do Property Vendors accept Bonds instead of cash deposits?

Property Deposit Bonds are relatively new to the UK market but are a fully accepted and established method of selling property in a number of countries including Australia, New Zealand and the USA. The acceptance of a TWPN Bond as an alternative to a cash deposit is becoming an increasing common method of purchasing property off the plans. If however, your Vendor or your Vendor’s Solicitor is not fully familiar with the benefits of a TWPN Bond, we would be delighted to acquaint them of the features of the product.

What if I can’t complete the purchase?

If the purchase is not completed because of the default of the Purchaser, then the Bond will be called up by the Vendor, and paid by the Insurer.  The Insurer will then take steps to recover this money from the defaulting Purchaser. This is done by the Insurer making demand on the Purchaser for reimbursement of the amount paid to the Vendor - plus any costs incurred arise directly from the Purchaser’s default. This undertaking by the Purchaser to indemnify the Insurer is set out in the Indemnity that the Purchaser is required to sign in favour of the Insurer when taking out the Bond.

How do I apply for a TWPN Property Deposit Bond?

The TWPN Bond application process consists of two stages:

Stage 1: Make application for a TWPN Bond – complete and submit the online application form along with the appropriate application fee (online credit card payment option available). You will be notified of a decision within 24 hours or the next business day. Your application will be checked to ensure it meets TWPN credit approval. If approved, you will receive an approval number and a conditional offer outlining the terms of the approval, a formal premium quote and the documentation required to be completed should you decide to accept the offer and go-ahead with the purchase of the TWPN Bond. The approval offer will be valid for up to 30 days.    

Stage 2: Accept the offer and Purchase the TWPN Bond – Should you wish to accept the offer, then simply complete the required documentation as set out in your approval offer, and send with the appropriate premium. The bond will be sent to you or your conveyancing agent – depending upon your wish.     

What if I want to buy more than one property and have a property deposit bond for each one?

No problem. If you are buying more than one property in the same development, you should submit an on-line application for the highest value property you are purchasing, ensure you select ‘Multiple Purchases’ and we will contact you to obtain details of the additional properties
If the other property is at another development, an additional application (coupled with an additional application fee) will have to be made.
If you wish to buy more properties in the future using a TWPN Bond, then providing you still meet the credit criteria, then future bonds will be approved.
If you are a Corporate property owner with multiple purchase requirements to add to your portfolio, then please contact us directly to discuss your requirements. Multiple bonds can be arranged on special terms subject to meeting financial and total risk aggregation criteria.

Who is the issuer of the TWPN BOND?

The TWPN Deposti Bond is insured by a UK company with specialist expertise in the UK property development and construction industry.

The issuer of the TWPN Bond is a specialist credit and financial risk insurer and provides credit risk protection to a number of Government entities, banks and financial institutions. 

Risk evaluation and underwriting expertise on each bond is provided by a specialist property bonding and surety insurer with expertise in property deposit bonding.

The TWPN Property Deposit Bond Advantages for the Purchaser:

A TWPN Property Deposit Bond can be provided for purchases of residential and investment properties by personal buyers or commercial property investors alike.

Purchasing a property with guarantee of a TWPN Bond allows the buyer either to avoid borrowing or to maintain existing assets and investment earning until close to completion when the money must be paid.

A TWPN Bond can also protect against the possibility of losing a cash deposit - in the hopefully unlikely event of the builder / developer going into insolvency before completion of the property. A purchaser using the Bond is protected from possible loss of deposit in that the Bond cannot be claimed upon unless the property has been completed and then only as a result of the Purchaser's failure to complete the purchase contract

Features for a purchaser:

 

• Simple no fuss application and approval process.
• Avoids the need to liquidate assets to pay the cash deposit - keep investment assets earning until close to completion date. 
• Avoid the cost and inconvenience of raising funds to pay the cash deposit (i.e. costly bridging loans etc) 
• TWPN Bond extendable for a further 3 or 6 months for minimal extension fee. 
• Avoid the risk of losing the cash deposit should the builder / developer go into insolvency

The TWPN Property Deposit Bond Advantages for the Developer / Vendor:

The advantages of a TWPN Property Deposit Bond to a Vendor / Developer include:

• Facilitates easier off-plan sales to both owner-occupiers and investors.
• Assists in sales closing by offering the Purchaser more options in respect of organising the Deposit. Deposit requirements can be handled by way of appropriate clause in Sale & Purchase Agreement.
• Generous deposit limits available and realistic duration options - all within the average new build timeframe of 12 to 18 months to complete.
• Bond payable to Vendor upon demand.
• Willingness to accept the Bond can be marketed as part of the Developer's marketing package to property buyers.
• Can be used to support credit lines with the bank.

The TWPN Property Deposit Bond / Solicitors Brief:

From studying other pages on our “Service Partners” website (Click Here) you will have seen that the TWPN Bond offers an attractive alternative to raising funds to pay the deposit at exchange of Contracts.

Purchasing a property with the guarantee of a TWPN Bond allows the Purchaser either to avoid borrowing or to maintain existing assets and investment earning until close to completion when the funds are required

If the client has chosen to use the TWPN Bond, he/she will need to apply for a quotation and underwriting acceptance online.
The Sale and Purchase agreement will need to include reference to the TWPN Bond, in lieu of cash deposit.

As part of the process of issuing the TWPN Bond, and the Insurer guaranteeing your clients payment obligations under the contract (to the extent of the 10% cash deposit).

Your client will have also signed an indemnity in favour of the Insurer. In the event that the Vendor calls the bond because of your client's default, the Insurer will pay the Vendor and seek recovery from your client.

The TWPN Bond does not change your client's obligations under the Sale and Purchase agreement; it merely offers him/her the attractive alternative of deferring payment of the deposit until completion

Please refer to the Vendor's solicitor who will be able to confirm acceptability of the TWPN Bond in lieu of deposit.
If you have any queries please feel free to contact us.

To request further information click here....