New scheme means buyers won’t lose the plot

Anyone buying a brand new home, especially off-plan, may find themselves having to shell out a five or 10% deposit long before the property is ready to move into – which may not always be convenient.

So news of a financial policy that allows home buyers to secure a property by guaranteeing the required deposit in a simple and cost-effective manner is bound to be welcome.

That solution comes in the shape of the Zurich Property Deposit Guarantee, which is available exclusively through the XBond Company, and now offered at Redrow developments around the UK as the latest in its efforts to help make moving house as simple and stress-free as possible.

Instead of having to hand over a full five or 10% cash deposit, buyers simply pay a guarantee fee which is, typically, considerably cheaper than the cost of borrowing from the high street.

Simon Bennett, Redrow’s group marketing director, explains: “For various reasons, purchasers may not be able to or may not wish to part with a sizeable deposit at the point of exchange. A prime example would include downsizers, who can raise a Zurich PDG to exchange on their purchase without the need to sell their existing home immediately, arrange an equity release or interrupt savings plans.

“At the same time it could also suit a first time buyer, where the guarantee could be raised against the parents’ financial status, allowing a property to be selected off-plan and then make use of the construction period to save the deposit in full.

“Investors too can use the service to contract on more than one property and the cost of Zurich PDG is tax deductible.”

The Zurich PDG is a secure promise made by Zurich Bank to a vendor on behalf of the purchaser. It guarantees the purchaser’s deposit on exchange of contracts, allowing the purchaser to retain their cash until completion. It is not a loan, but a solid, bank-written guarantee that the exchange deposit is owed to the vendor and will be paid should the purchaser default.

Paul Gratton, executive chairman of the XBond Company, comments: “Developers like Redrow have been very quick to realise that the Zurich PDG simplifies and speeds up the entire buying process for customers and their own sales teams. It is fast becoming one of the most sought-after financial new products.”

Redrow builds around 5,000 new homes per annum across England, Scotland and Wales, offering everything from starter homes to family housing, large executive detached houses, elegant townhouses, contemporary city centre apartments and sensitive refurbishments of Grade II listed properties to create modern homes with period features.

The help Redrow can offer is flexible too, reflecting the fact that every home buyer has different needs. The Zurich PDG will be added to a choice of incentives – available on selected properties - that also includes mortgage subsidies, rental guarantees, part exchange or assisted sale, and stamp duty or deposit paid schemes.

Simon Bennett adds: “Because no two people or no two moves are the same, we think it’s important to tailor a moving package that’s right for the individual customer and we’re keen to make sure we help facilitate their move in the best possible way. Our over-riding message is ‘don’t move until you’ve talked to us’.”

For further information about Redrow developments near you visit Redrow.co.uk.

For details of the Zurich Property Deposit Guarantee go to Thexbond.com.

FAQs

Q. What is it?

A. The Zurich Property Deposit Guarantee is an alternative to providing a cash deposit when committing to buying a new home. The Guarantee allows you to delay paying the deposit until the build is completed – meaning that you, the buyer, can secure it quickly and conveniently.

Q. Who are The XBond Company?

A. The XBond Company works in association with Zurich. The Guarantee has been launched in the property market by Zurich exclusively with The XBond Company. The XBond Company will work with the customer to make sure the whole process is quick and easy from the moment they decide which property is right for them and until they take ownership.

Q. How does it work?

A. Instead of paying the deposit in cash, the buyer purchases a Guarantee from Zurich, which the developer agrees to accept in place of a cash deposit. The XBond Company ensures the application process is smooth and simple and rapidly guarantees the deposit to the seller – meaning that buyers can act very quickly to secure the property they want.

Q. Can the deposit be part cash and part Guarantee?

A. Yes. The Guarantee can cover the balance of the amount of deposit required. The XBond Company will be on hand to help customers understand what’s possible throughout the process.

Q. How much does it cost?

A. The Guarantee is generally cheaper for all concerned. Indeed, the fee (4.99% for a 1 year term) is often cheaper than borrowing off the High Street or indeed the cost of lost interest on your savings.

Q. Might it encourage people to get into debt?

A. No, this is just allowing people to secure a property without having to realise their cash initially.

Q. Do you check that applicants are creditworthy?

A. The qualifying process is designed to ensure that applicants are creditworthy and sound, although the Guarantee only guarantees the deposit amount not the full purchase price.

Q. How do you apply for one?

A. The XBond Company will handle the process which is relatively painless, compared to trying to raise a deposit. Buyers may be introduced to the Guarantee by the home builder, the lender or a legal/ financial advisor. Buyers can also apply now online (www.thexbond.com) or by phone: 0845 8822888. A simpler, faster, affordable process.

Q. Will my legal or financial advisor be able to arrange a Zurich Property Deposit Guarantee?

A. Yes, it’s a simple, fast, smooth and affordable process and an increasingly routine one for both advisors and developers. The XBond Company can provide sales packs for your solicitor, financial advisor, developer or vendor.

Q. Is the Zurich Property Deposit Guarantee transferable?

A. No. The Guarantee will be issued based on the personal credit standing of the potential buyer against a specific property purchase.

Q. What length of time does it remain valid for?

A. The Zurich Property Deposit Guarantee can be valid for any period between 6 months and two years, however, longer terms are possible, subject to approval.

Q. Can the expiry date of The Zurich Property Deposit Guarantee be amended?

A. Yes, subject to payment of an additional premium.

Q. Can you apply for more than one Guarantee at the same time?

A. Yes, but each application would be assessed and you would need to have sufficient funds to be able to pay for all the properties in full at completion. The XBond Company can process this for the customer.

Q. Are there risks attached?

A .The Guarantee is secured by Zurich Bank, part of the Zurich Financial Services group, one of the world’s leading global financial services groups. The Bank is regulated by both the Irish regulator and the FSA in the UK which includes assessment of its financial strength to offer such products. The group has a strong financial rating which means that market analysts believe they are a safe and secure company to do business with.

Q. Could I use it to purchase a property overseas?

A. Not at present but we anticipate it will be available for overseas purchases by the end of the year The XBond Company can provide more details.