What a deposit release bond costs
Premiums typically work out at around 4-6% a year, against 12-20% for mezzanine finance. The rate for your scheme depends mostly on the developer's financial strength.
Typical cost
Indicative figures. Your terms confirm the exact rate and how it is applied to your scheme.
How it is priced
The insurer quotes a premium as an annual rate. Each quotation sets out exactly how that rate is applied to your scheme and when the premium is payable. The developer pays the premium.
What moves the premium
- Financial strength and net assets of the developer and the group
- The total amount of deposits to be released
- The term of the bond and the build programme
- The security offered
- Track record and the scheme itself
Minimum premiums
Some insurers apply a minimum premium. Any minimum is shown in your terms before you commit.
Extensions
If the build runs past the term of the bond, an extension can be requested. It is subject to the insurer agreeing and an additional premium, which is quoted when the extension is arranged.
Security and collateral
Most insurers ask for security. A personal guarantee is normal and a counter-indemnity is often preferred. Other forms, such as cash collateral, are considered case by case. Your terms say exactly what is required.
Comparing it properly
The fair comparison is with the mezzanine or bridging the scheme would otherwise need. We set the bond cost out next to your other funding options so you can compare them on the same basis.
How we are paid
How we are paid for arranging your bond is set out in our terms of business and confirmed to you in writing before you commit.
Figures in any quotation are specific to that scheme and that insurer. Nothing on this page is an offer of cover.