Deed of Postponement Indemnity

Introduction

First introduced in 1980, The Right to Buy scheme allows local authority tenants to buy their homes at a heavily discounted price with an average of over 50,000 sales a year.  Borrowing the funds to acquire this type of property sees the majority of tenants secure a mortgage from traditional lenders and current legislation states that if borrowers then sell their property within three or five years they must repay the local authority the discount originally received. 

Lenders can be vulnerable on Right to Buy purchases because local authorities are reluctant to issue a Deed of Postponement, but this important document provides the lender with confirmation that both they and the local authority have claim to the property should the borrower sell in the three/five year period.  Our insurance can protect your loan security if you cannot secure or would prefer not to pursue a Deed of Postponement.

A new approach

As the local authority places first charge on the property to secure their repayment, you can be left in a difficult position when a borrower defaults and you have to repossess and sell the property.  From proceeds of the sale, you must first repay the local authority its original discount. In this instance, our policy protects you by covering any losses if there are insufficient funds left to reimburse your full loan.

Simple and flexible

This simple block policy offers comprehensive protection to your loan security from direct financial losses that may be incurred in the event that you have not secured a Deed of Postponement.  The policy is easy to arrange and we offer a generous £50,000 minimum limit.  The premium is charged per property and this is agreed at the outset.

Deed of Postponement - key benefits

  • Protection for every new loan granted against the growing number of Right to Buy properties
  • A generous minimum limit per property of £50,000 (higher limits may be available on request)
  • No claims discount when your policy is running claims free
  • Size of mortgage book discount
  • CML Handbook compliant

Our policy wordings are available on request. Please click here to contact us and request a copy.

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