Property Bonds and Loan Note Investments
A Property Bond or loan note is a contract for a loan that specifies when the loan must be repaid and usually also the interest payable. It has become very popular in recent years for property developers, investors and mutual funds particularly because of the security it provides.
Property Investment Bonds are considered legally binding contract, with both parties considered committed to the terms as they are written. For security a lawyer writes the agreement and overseas all parties are in agreement. Traditionally the loan/bond is completed by the lender. The note is considered valid until the amount listed on the document is paid in full by the borrower.
Loan notes encompass all of the pertinent details regarding the legal agreement reached by the parties concerned. This includes the contact information and names for all parties, as well as the principal balance and any interest rate being applied over the length of the loan. Additional information regarding the payment schedule, including the due date, and what happens if a payment is defaulted will be incorporated. A charge is placed over the land and property making this type of property investment low risk and secure.
Property Bonds vs Mortgage Bonds
Classed as an secure alternative investment a property bond is not a mortgage bond. Many have the tendency to connect ‘mortgage’ and ‘property’ however this is not the case. What is the difference?
Where HULT property bonds are secured against physical assets, such as a property development or an area of land with a intrinsic monetary worth, mortgage bonds are secured against a loan/mortgage or a pool of loan/mortgages. A mortgage bond is a loan against a loan which for HULT is not a smart property investment.
The primary reason for the financial collapse in 2007 was because of unsustainable mortgage bonds. Investment financiers would take a group of loan/mortgages and mask them in an entity called a CDO (collateralised debt obligation). The Bankers would then take out a loan against the CDO and offer more loans and mortgages to people who simply could not afford them. Increasing the debt over and over again, they would then put those CDO’s into another CDO and take out another loan on top of that, repeating the process. Many of these alternative investment CDO’s were added to mutual funds and underlined a huge number of High Street Investment and Banks. See the film: “The Big Short.”
As we all know too well, the CDO’s, filled with hundreds of thousands of bad mortgages, began to fail when home-owners could not afford to repay the loans, so thousands of people lost their properties and the taxpayer had to foot the bill for the bank’s bad debt.
Property bonds are not secured against bad loans. Property Bonds are secured against a physical asset with a current value that can be legally claimed by the investor in the event that the bond issuer defaults on their payments or go out of business.
Why Invest in Property Funds?
HULT’s property bond investments can boost your capital returns significantly. Simply put… it is a Bond in which your capital, securely makes a strong interest. The specialists at HULT have eradicated any weakness by providing full capital security and charge over land assets and future projects of each development. Giving our investors 100% peace of mind.
HULT Property Funds include the following benefits:
- Tax Free
- FCA Compliance (19 Years)
- Returns from 8% upwards
- Invest up to 5 years
- Asset Backed
- Reputable Property Lawyers
- Capital bank guaranteed*
- Catering for the Residential and Commercial demand
- High investment threshold
- Internationally known Developers
- SUCCESSFUL track record
- Fully Secured (FSCS PROTECTED)
For more information on the type of Property Investment you can invest in, from 8% upwards, capital bank guaranteed, in conjunction with the UK’s most reputable property companies contact us on: London 020 8123 5164.
HIGH NET WORTH and SOPHISTICATED INVESTORS ONLY