View more on these topics

Bond 2 Let to be relaunched at Mortgage Expo

Bond 2 Let, Opus Mortgages&#39 buy-to-let protection product for landlords and investors, is set to be formally relaunched this week in London at Mortgage Expo.

A rental protection product designed by Opus Mortgages and backed by major lending companies, Bond 2 Let means that when an investor takes out a buy-to-let mortgage they can now also take out a bond, which offers them total protection on their investment.

The bond delivers up to six months&#39 mortgage payments in the event of a property remaining unoccupied for a protracted period, or if a tenant defaults or is late making a payment.

It also covers an investor in the event of an increase in Bank of England base rates, enabling Bond-holders to draw on funds to compensate for higher mortgage repayments.

The scheme works by lodging a bond at the outset of the mortgage, taking six months&#39 mortgage payments upfront and placing the funds in an interest-bearing account. These are available to a bond-holder at any stage.

Investors also have the ability to top up their bond, should they ever need to. All funds left within the bond when the buy-to-let mortgage matures, or is redeemed, are repaid in full to the investor. This includes all interest.

Lockhart Bruce, finance and marketing director of Opus, says: “We&#39re confident that Bond 2 Let meets a real need in the buy-to-let sector.

“There is a lot of risk associated with the buy-to-let market these days. The supply of properties outstrips demand from tenants &#45 and it&#39s a fact that Landlords experience periods when their properties are vacant. In London and the South-East in particular, this can cost them a lot of money if they are not protected.”

Research conducted by Opus reveals that in 2003, voids or periods when properties are not tenanted could cost buy-to-let investors £1.125bn in lost income. The UK&#39s 375,000 buy-to-let landlords and investors face significant financial exposure should their buy-to-let property portfolios be unoccupied for lengthy periods.

The company says it expects the scheme, which wrote £140mn of business during 2002, to be of major interest to brokers attending Expo who have B2L clients.

Figures released recently by the Association of Residential Letting Agents reveal that 58% of its members recorded annual voids of more than five weeks in prime London locations. The average house records a rental void of £3,246 annually, while the average flat suffers an average void of £1,764.

Recommended

Can one recommend NU equity deals and remain compliant?

An open letter to the MCCB and SHIP from Simon ChalkYou may be aware of the concerns that I and other industry commentators have about Norwich Union&#39s equity release mortgage products. The Daily Mail fired a warning shot across the industry&#39s bows with its feature in September 2002 and Which? followed suit this summer. My […]

Pink costs based on risk

Pink Home Loans has revealed the initial price structure for its appointed representative proposition. At the first of 10 regulation roadshows earlier this month Pink revealed that, for its appointed representatives the pricing structure will be based on customers&#39 risk ratings. Pink will be in a position to announce final pricing details over the next […]

London rental yields hit 7%

London rental yields have hit 7% as Paragon Mortgages&#39 buy-to-let Index shows further recovery in the capital. The index reveals that yields have risen in the capital from a low of 6.56% in July to 7% in October. The trend in the capital is symptomatic of a general firming of yields in southern parts of […]

Nationwide launches finance website for teens

Nationwide has launched a website to help 14-19 year olds manage their finances. The site, called Cash Matters, aims to provide clear and accessible information to young people on how to make the most of their money and develop financial independence. It covers issues ranging from the world of work to saving for a rainy […]

Newsletter

News and expert analysis straight to your inbox

Sign up