Overseas Exchange Bond

Introduction to Overseas Exchange Bond®

Introducing a new way to purchase your Portuguese home in the sun. The Overseas Exchange Bond® replaces the security money (often called the deposit) you put down normally at contract exchange. With the Exchange Bond®, apart from a small holding deposit, you keep your money until completion when you pay the full purchase price less deposit paid. Thus it gives you complete control and security over your money. Your money could be earning a return or you can avoid expensive additional borrowing.

The Overseas Exchange Bond® is designed to free up cash that is normally tied up between the promissory contract exchange and completion period of a property purchase. The bond is issued on behalf of the purchaser to Oceânico or sister company (the Developer) when exchanging contracts. It provides a simple, cheap, yet equally effective alternative to cash for both parties.

The Overseas Exchange Bond® is underwritten and issued by the Exchange Insurance Company, a company established solely to serve the needs of property purchasers and sellers.

What properties can I purchase through Overseas Exchange Bond®?

As the innovator of using the Overseas Exchange Bond® for buying Portuguese property, three five star developments are available with this method of purchasing, the new Vilamoura Golf & Garden Resort, Amendoeira Golf Resort near Silves and Belmar Spa and Beach Resort near Praia da Luz. 

The Vilamoura Golf & Garden Resort and Amendoeira Golf Resort’s two & three bedroom apartments and three, four and five bedroom villas include a €40,000 Golf Title to seven championship Golf Courses.

Amendoeira Stepping Stones properties – two bedroom apartments and three bedroom villas are inclusive of a seven Golf Course Membership and green fees for 3 years from completion.

Belmar Spa and Beach Resort, offers a choice of one, two and three bedroom apartments and two bedroom townhouses.

What happens once I have chosen my property?

1) The following deposits are required for:

Outright properties

All Belmar units. Two & three bedroom apartments and three bedroom villas on the Vilamoura Golf & Garden Resort and Amendoeira Golf Resort

  • 5% of purchase price. The Exchange Bond value is €50,000 over 24 months. The typical bond premium is €5,600 plus €65 application fee.

Four & Five bedroom Prestige villas on the Vilamoura Golf & Garden Resort and Amendoeira Golf Resort.

  • 5% of purchase price. The Exchange Bond value is €100,000 over 24 months. The typical bond premium is €11,200 plus €65 application fee.

Fractional ownership/Stepping Stones

Two bedroom apartments on Amendoeira Golf Resort

  • 5% of purchase price. The Exchange Bond value is €25,000 over 24 months. The typical bond premium is €2,800 plus €65 application fee.

Three bedroom villas on the Vilamopura Golf & Garden Resort and Amendoeira Golf Resort

  • 5% of purchase price. The Exchange Bond value is €40,000 over 24 months. The typical bond premium is €4,480 plus €65 application fee.

2) The deposit is payable to the resorts developer. This is fully refundable subject to inspection visit and application approval by Overseas Exchange Bond®. Should you decide not to go ahead with the purchase of the property the deposit amount will be fully refundable.

3) Application is available online.

4) On approval of application the purchaser pays the bond premium directly to The Exchange Insurance Company Ltd. The bond premium will be reimbursed if the purchaser completes the deed within the agreed term stipulated in the promissory contract – this will then be deducted from purchase price along with full deposit amount.

FAQ

1. What is an Overseas Exchange Bond®?

An Exchange Bond® is a financial guarantee provided by The Exchange Insurance Company Ltd ("ExCo") to a Seller/Developer on behalf of a Purchaser replacing the traditional cash deposit typically required at exchange of promissory contracts for a residential property.

2. What are the benefits for the buyer?

Ensures no cash at risk if the developer fails to perform.
Secures your new home without deploying savings or bridging finance.
Avoids having to realise other capital investments.
The product is unsecured and inexpensive.
Application process is easy, fast and convenient.

3. Are they risky to use?

No. The objective is to place both parties (Purchaser and Developer) in the same position as if they had used a cash deposit. Both parties would have completed a contract to purchase, legally binding without the normal cash deposit necessary.

4. What happens if the buyer does not complete the purchase deed?

As a purchaser you are legally liable to complete the purchase deed. If you fail to complete the purchase you will forfeit your 5% deposit and your Exchange Bond® - which in this case means that a claim will be made under the Exchange Bond® for the €100,000, €50,000, €40,000 or €25,000 whichever was your original deposit amount and ExCo will seek immediate reimbursement from you.

5. What are the key criteria for issuing an Overseas Exchange Bond®?

There is a simple credit check so that if you fail to complete the purchase and ExCo are obliged to make a payment under the Exchange Bond®, you will be able to reimburse such amount to ExCo.

6. Can I apply for more than one Overseas Exchange Bond® at the same time?

Yes, but this would be a factor in the approval process. ExCo needs to be satisfied that you could meet all your obligations under every Exchange Bond® issued on your behalf. Multiple Exchange Bond® applications could be conditional on additional credit requirements.

7. How long will my application take to process and when will the Exchange Bond® be sent to me?

Upon receipt of a fully completed application form, you should be given approval within 48 hours. Additional information requirements could delay this process – the system is reliant on prompt responses from you. A Bond offer is then sent to both you and your solicitor which has to be signed by both parties and returned. ExCo then sends the bond certificate directly to your solicitor for him to hand over when the exchange of contracts happens.

8. What happens if I get made redundant or seriously ill?

If any circumstances arise which might undermine your ability to complete your purchase contract, you should immediately inform your legal adviser, ExCo and the Developer, of your situation. Such circumstances do NOT release you from your obligations under your purchase contract or your agreement, but a settlement could be reached between all parties which could mitigate your liabilities.

9. Is the Exchange Insurance Company (ExCo) regulated?

Yes. ExCo is a European specialist general insurance company based in the City of London and is authorised and regulated by the FSA in the UK. It carries on business in Ireland on a "freedom of services" basis, and has an office in Dublin.

10. Does Algarve Property Finders endorse the Exchange Bond?

All Exchange Bond purchases are an agreement between the buyer (you), the developer and the Exchange Bond company. Algarve Property Finders is not connected to and does not deal with the Exchange bond company directly or indirectly. We are however very pleased to assist with your application if required, but this is made directly to the Exchange Bond company. If the application is approved, confirmation will be sent to your legal representative.