There are 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% per annum to 15% per annum - but please treat any bonds suggesting returns in excess of 8% per annum with 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.
Why is there such a difference in the target returns offered from provider-to-provider?
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.
Do I have to pay tax on returns generated from property bonds?
Generally, yes. However, some property bonds are ISA eligible via the IFISA, which mean returns are tax free.
MAVEN 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.
With the ability to hold peer-to-peer loans and debt-based securities, IFISA investments have 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, download our free IFISA guide.