There are many different types of property bond, and each will have different risk and return profiles. There can also be a significant spead of target returns, all of which will vary from provider-to-provider.
Typically, returns can range from 4% to 15% per annum - but treat any bonds suggesting returns in excess of 8% per annum with particular caution.
Generally, the higher the return, the higher the risk. So, before investing into a particular property bond, it's essential that you understand a number of key points.
The reason that there can be such a large difference in the target returns offered from provider-to-provider is that every bond issuer is different.
Some property bonds can be issued directly by property compaines or property developers, while others can be issued by specialist lending companies. They can also be listed bonds, or Innovative Finance ISA (IFISA) bonds. All are different, and therefore the target returns may vary.
Generally, you will be required to pay tax on the returns you recieve from a property bond. However, some property bonds are IFISA-eligible, which means that all returns are tax-free.
You may also be able to hold property bonds in your SIPP or SSAS pension, benefiting from generous tax-reliefs.
CARLTON Bonds are an IFISA provider specialising in fixed term property bonds.
Against a backdrop of low interest rates and a volatile stock market, the IFISA can provide an attractive investment opportunity for experienced investors.
The property-backed IFISA has the potential to generate higher rates of return than more traditional investment routes for investors with a greater appetite for risk.
To find out more about property bonds, .