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Bond brokers let you trade and invest in fixed-income investments like corporate & government bonds. In this guide we have tested, compared, ranked, and reviewed some of the best bond brokers that are regulated in the UK by the FCA. We also explain what bonds are and how you can make money by investing in bonds. All investing carries risk. This article contains affiliate links which may earn us some form of income if you go on to open an account. 

Compare bond brokers

You can use our comparison of what we think are the best bond brokers to compare how much it costs to buy and sell bonds, what the on going account fees are and how many bonds are available on their bond trading platform.

Bond BrokerBonds AvailableOnline Bond Dealing CommissionPhone Dealing ChargeAccount FeeVisit Bond Broker
Interactive Investor bond investing platform10,000+£7.99 or £3.99 for “Super Investors”Same as online£9.99 a monthSee Bonds
Capital at Risk
Saxo Markets bond trading platform4,5000.2% to 0.05% on Government bonds depending on account typeVolume dependant0.12% or 0.08% for VIP accountsSee Bonds
Capital at Risk
Interactive Brokers bond trading platform1m+0.1% to 0.015% depending on volumeAvailable on requestnaSee Bonds
Capital at Risk
AJ Bell Youinvest bond investing platformna£9.95 (or £4.95 Shares, where there were 10 or more online share deals in the previous month)£29.95 per deal0.25% capped at £3.50 per monthSee Bonds
Capital at Risk
Hargreaves Lansdown bond investing platform10,000+£11.95 (or £5.95 if more than 20 deals done in previous month)1% (£20 minimum, £50 maximum)0.45% capped at £45 per annumSee Bonds
Capital at Risk

Our picks of the best bond trading platforms in the UK reviewed

We have chosen what we think are the best bond brokers based on:

  • over 7,000 votes in our annual awards
  • our own experiences testing the bond trading platforms with real money
  • an in-depth comparison of the features that make them stand out compared to alternative bond brokers.
  • interviews with the bond broker CEOs and senior management

Saxo Markets: Best bond broker 2022

Saxo Markets won our award for best bond investing platform in 2022 as it offers a professional trading platform where investors can buy 4,500+ digitally tradeable government and corporate bonds in Europe, the US, Asia, Africa, the Middle East, and Latin America.

Pros:

  • Low commissions from 0.5%
  • Robust online dealing
  • Dedicated bond dealing desk

Cons:

  • More suited to advanced investors
  • High $10,000 minimum trade size

Capital at risk

*Buy bonds from 0.05% in commission per trade with a USD 10,000 minimum trade size on online bonds

Hargreaves Lansdown

Hargreaves Lansdown: Wide range of bonds, gilts & PIBS

One advantage of investing in bonds through Hargreaves Lansdown is that bonds can be purchased within a range of accounts, including a Fund and Share Account, a Stocks & Shares ISA, and a SIPP.

Pros:

  • Excellent bond research and screeners
  • Wide bond market access
  • Established provide

Cons:

0.45% account fee relatively high

*Online bond trades are charged at £11.95 per deal or £5.95 if you do over 20 deals per month. For buying bonds over the phone the dealing charge is 1% (£20 minimum, £50 maximum).

Interactive Investor

Interactive Investor: Best overall investing account 2022

With Interactive Investor you can buy existing bonds online or over the phone, as well as apply to purchase bond news issues and IPOs.

Pros:

  • Fixed account fee of £9.99a month
  • Low dealing charges of £7.99

Cons:

  • Limited international corporate bonds

*Dealing commissions are a free trade every month, then bond deals are charged at £7.99 or upgrade to a £19.99 “Super Investor” account 2 free monthly trades and deal for £3.99. Regular investing is free.

AJ Bell Youinvest

AJ Bell Youinvest: Best for low-cost bond investing

With AJ Bell Youinvest you can buy and sell Government bonds, corporate bonds and permanent interest-bearing shares (PIBS) online or over the phone.

Pros:

  • 0.25%* low-cost account charge
  • Low dealing fee of £9.95

Cons:

  • Limited international bonds

*Bond account fees are capped at £3.50 a month. Dealing costs are £9.95 for buying and selling bonds online but drop to £4.95 where there were 10 or more online share or bond deals in the previous month

Interactive Brokers

Interactive Brokers: Best for international bond investing

Interactive Brokers offers by far the widest range of bonds to invest in. You can trade over 1 million bonds with Interactive Brokers including UK, US, and international government bonds, over 26,000 US corporate bonds and thousands of UK corporate retail bonds.

Pros:

  • Very low dealing fee of 0.1%*
  • Excellent platform
  • Hug range of international bonds

Cons:

  • US-based
  • More suited to advanced investors
*Minimum dealing commisssions are £1 in the UK or 0.05% of the deal size.

How to choose a bond broker

When choosing a bond broker, there are several things to consider, including:

  • The range of bonds on offer from each broker.
  • The quality of each broker’s platform (ease of use, reliability, mobile app, etc.).
  • The customer service and support offered by each broker.
  • The research and investment tools provided by each broker.
  • Brokers’ reputations (you can find reviews on Good Money Guide).
  • Fees and charges.
  • Whether the brokers are regulated by the UK Financial Conduct Authority (FCA) and whether you are protected by the Financial Services Compensation Scheme (FSCS).

Ultimately, the best bond broker for you will depend on what you’re looking for from them so we have reviewed the biggest and best broker for buying investment bonds in the UK. If you still need help deciding which bond broker is right for you we explain the pros and cons and summarise what makes each bond broker different in our best bond broker picks.

Bond Investing Explained

Bond brokers let you buy and sell investments such as corporate bonds, retail bonds on ORB, gilts & Government bonds. Bonds can either be bought as a long-term investment to receive income through interest payments (coupons) or traded in the short-term based on their market price.

Investment bonds are a type of income-generating investment that can pay regular interest payments called coupons. In the simplest terms bonds are great big IOUs. They are typically issued by companies or governments when they’re looking to raise more money than a bank might normally be able to pay. For example, if a company needs to raise investment for a new venture or a government has to fund spending for roads, hospitals or that new war they just have to have, they will issue bonds.

When you buy bonds you will be effectively lending money to the bond issuer who will promise to pay it back with interest added on top. When you buy a bond, you can either choose to keep it for the duration of the term and redeem it or sell it on the bond market. The date at which the issuer will pay the bond back is known as the maturity date and your return will be termed as the yield.

When investing in bonds, it’s important to consider your investment goals and risk tolerance. The best bonds for you will depend on several factors, including your income requirements, your investment horizon, and your ability to tolerate risk.

While the amount of interest paid on a bond is fixed, the yield (the interest payment relative to the current bond price) will fluctuate as the bond’s price changes. A bond’s ‘yield to maturity’ is the total return you will receive for holding the bond until it matures. Yield to maturity takes into account the redemption price and all the interest paid from the time of the purchase until maturity.

It’s important to understand that with bonds, risk and return are highly correlated. This means that the higher the yield on a bond, the higher the risk of default. One of the most common mistakes beginner investors make when choosing their first bonds is reaching for high yields. High-yield bonds can deliver high returns at times, however, these high returns come with a higher level of risk. For example, the issuing entity may declare bankruptcy and be unable to pay you back your initial investment.

When assessing bond risk, you can turn to credit rating agencies such as Standard and Poor’s, Moody’s, and Fitch for guidance. These agencies give bonds credit ratings, which indicate the probability of default. Typically, bond ratings are grouped into two main categories: investment grade (higher-rated bonds) and high yield (lower-rated bonds).

One of the easiest ways to manage risk when investing in bonds is to build a diversified portfolio of securities. A diversified portfolio might include several types of bonds, including government bonds and corporate bonds, as well as bonds with different maturities to reduce interest-rate risk.

Making money from investing in bonds

There are two main ways to make money from bonds.

  • Coupons (interest payments): The first way to profit from bonds is to hold them until their maturity date and collect interest payments along the way. Interest is usually paid twice a year.
  • Price speculation: The second way to make money from bonds is to sell them at a higher price than you paid for them. For example, if you buy £10,000 worth of a bond and the market value of your bond investment increases to £11,000, you can sell for a £1,000 profit. Bond prices can rise (or fall) for many reasons, including changes in interest rates, changes to a borrower’s credit risk profile, and the time to maturity.

Investment bond valuations

Each bond has a ‘par value’, which is the amount of money that the bond issuer promises to repay investors at the bond’s maturity date. However, a bond can trade at its par value, a premium, or a discount. Bonds trade at a premium when the current price is higher than the par value. Discount bonds are the opposite, selling for lower than the par value.

A bond’s value can be influenced by several factors, including:

  • Interest rates: Interest rates are the biggest driver of bond prices and all bonds are affected by interest rate changes, regardless of the issuer or the credit rating. Bond prices are inversely proportional to interest rate movements. So, if interest rates rise, bond prices tend to fall. If interest rates fall, bond prices tend to rise.
  • Time to maturity: Bonds are typically paid in full when they mature. Since a bondholder is closer to receiving the par value as the maturity date approaches, a bond’s price tends to move toward par as it ages.
  • The entity’s credit rating: If a borrower experiences a credit downgrade, its bonds are likely to fall in value. By contrast, if a borrower experiences a credit upgrade, its bonds may rise in value. It’s worth noting that different brokers can offer different prices for the same bond. Because bonds are not traded in a centralised location like stocks are, brokers can set their prices.

In theory, the true value of a bond can be obtained by discounting the bond’s expected cash flows to their present value, using an appropriate discount rate.

Advantages of investing in bonds

  • Regular income: Investing in bonds can be a good way to generate passive income. The yields on bonds are generally higher than the interest rates on cash savings accounts.  Bonds offer a predictable income stream, paying you a fixed amount of interest several times per year.
  • Diversification: Investing in bonds can be a good way to diversify your investment portfolio. If you own a portfolio of stocks and bonds, the bonds may provide protection when share prices are falling.
  • Lower risk: Bonds are generally seen as lower-risk investments. This is particularly true when it comes to government bonds, as governments such as the US and the UK are unlikely to be unable to repay their debts. This means that you can be relatively confident that you’re going to see a positive return on your money if you hold the bond until maturity. Adding bonds to a portfolio of stocks can add stability and help lower overall portfolio risk because bonds behave differently to stocks.
  • Higher interest rates: Higher returns than cash savings. Yields on bonds tend to be higher than the interest rates on cash savings accounts.
  • Speculation: You can speculate on future price movements. You can use liquid Government bonds to bet on future interest rate moves. If you get it right you could make a considerable amount of money.

Disadvantages of investing in bonds

  • Lower returns than shares. Over the long run, bonds have generated lower returns than shares for investors.
  • Less transparency. There’s less transparency in the bond market than in the stock market, so brokers can sometimes get away with charging higher prices for individual securities.
  • Interest rate risk. Bond prices are inversely related to interest rate movements. So, if interest rates rise, your bonds may fall in value.
  • Credit risk. When you invest in a bond, you face the risk that the issuer may default on its obligations. You risk losing out on interest payments, getting your principal back, or both. With bonds it is possible to lose your entire investment.
  • Price falls: The market may move against you. The price of the bond may fluctuate depending on market conditions. If you have to take your money when the price is low you may end up with a loss. Some bonds also come with specific risks related to that issue, but these should all be spelled out in the contract. One of these could be ‘call provisions’ which allow the issuer to repay it at an earlier date.

Different types of bonds offered by bond brokers:

  • Gilts & UK Government bonds. Prices will fluctuate according to interest rates. They are AAA-rated and are one of the safest options available. Most gilts are conventional and pay a fixed coupon twice a year. Index-linked gilts, though, are linked to the UK retail price index of inflation (RPI). Perpetuated gilts have no maturity rate so you’re reliant on the market price. These are seen as slightly riskier.
  • Corporate bonds: Issued by all types of organisations including Governments aside from the UK banks and corporations. Like Government bonds, they do this to raise money for spending. The price will depend on how creditworthy the issue is perceived to be.
  • Floating bonds: Coupon is fixed on a reference rate such as LIBOR.
  • Convertible bonds: You can convert proceeds into equity in the company.
  • Subordinated bonds: You accept a lower claim in the event of liquidation in return for a higher yield.
  • Index-Linked Gilts: Index-linked gilts are Government issued bonds which are linked to the rate of inflation. A gilt will follow the retail price index which means its price will rise in line with inflation. This addresses one of the key risks that a bond with a long maturity may see its value eroded by inflation. These gilts will have their principal and coupon payments adjusted in line with inflation. However, if inflation were to fall over the life of the bond the value of the gilt could potentially fall to lower than its face value. Pricing this can be complicated and so can trading. It often depends on where the market thinks inflation will be at a given point. This is termed the break-even or spread inflation which determines how much you may buy or sell them for. These can be used to compliment other bonds to hedge against inflation risk.

Investment bond credit ratings

Most issuers will have been rated by one of the independent credit rating organisations such as Moodys or Standard & Poor’s. These are badges which show how reliable a bond issuer is. They will be categorised as followed:

  • AAA: The highest rating agencies can give.
  • AA: Still very strong, with only minor differences to AAA.
  • A: Extremely strong ability to repay although they may be affected by movements in the market.
  • BBB: Adequate ability to meet its commitments, but adverse effects from the market are more likely.

Anything below BBB should be treated with caution. These higher-risk bonds will generally offer a higher return in much the same way as poor credit loans attract higher interest. The yields are higher, but so are the risks.

Bond broker terminology

When investing in bonds you will at some point have to talk to your broker on the phone as not all bonds are available online. Whilst you can buy bonds online easily enough at issue and through the market, selling bonds can prove a little more nuanced. Here are is a glossary of the most commonly used terms when dealing in bonds:

  • Par value: Par is the face value of a bond.
  • Discount: A bond trading at less than its face value will be trading at a discount.
  • Credit rating: Issues will have a credit rating issued to them by one of the main credit rating agencies: Standard & Poor’s or Moodys.
  • Market rates of interest: The market interest rate will affect the price of a bond. If interest rates rise a bond will have to be sold at a discount to remain competitive. If they fall the bond price may rise.
  • Premium: If a bond is trading higher than face value they will be trading at a premium.
  • Coupon: A coupon is the interest rate of the bond. For example, a bond of £1,000 at 5% interest means the issuer promises to pay £50 of interest per year.
  • Call provision: Some issuers will have a call provision on the bond which means they can choose to repay it earlier. This may affect the overall yield and represents an issue-specific risk.
  • Maturity: Bond maturity is the point at which the bond will be paid out.
  • Accrued interest: Accrued interest is the theoretical amount of interest you’ve built up – namely not yet paid out interest on the bond.
  • Bid and ask price: The bid price is the highest price a buyer will pay. The ask price is the lowest price offered by sellers.
  • Spread: The spread is difference between the ask and bid price
  • Base points: This is one hundredth of one percentage point. For example, let’s say yield falls from 5.45% to 5.40% that means it has fallen five base points.
  • Yield: In bonds the yield is the annual return on investment and refers to the purchase price and the promised interest which is also known as the coupon payment. The coupon rate is fixed but the purchase price fluctuates depending on interest rates. The value of your bond will be driven by supply and demand. This relies on the creditworthiness of the issuer and also interest rates. If interest rates fall, a fixed rate bond becomes more appealing. Likewise, its value will fall if rates rise. The current yield refers to the amount of yield you receive every year. This is calculated by dividing the annual interest by the purchase price.
  • Yield to maturity: The yield to maturity is the total return an investor receives for holding the bond until it matures. It takes into account the redemption price and all the interest paid from time of purchase until maturity.

Bond investing books: 

Here are some of the best books about investing in UK bonds:

  1. The Sterling Bonds and Fixed Income Handbook: A practical guide for investors and advisers
    An excellent guide to the UK bond market by Mark Glowery and covers absolutely everything you need to know about investing in bonds.
  2. The Bond Book by Annette Thau
    This tops almost every list and is a great handbook for any seasoned investor wanting to get involved with bonds or equity investors who want to diversify.
  3. The Strategic Bonds Investor by Anthony Crescenzi
    After the financial crisis bonds have been touted as one of the few stable investments left. This great guide helps you understand how to maximise your returns from bonds.
  4. Step by Step Bond Investing by Joseph Hogue
    ‘Ditch the stock market game’, this book tells you, ‘learn about the safety and returns of bond investing.’ And that’s pretty much what this book offers – a great starter guide for the newbie bond investor.
  5. The Complete Guide to Investing in Bonds and Bond Funds by Martha Maeda
    A great Bible for anyone who has never invested in bonds before. This shows you the ropes and helps you understand the peculiarities of bond investing.

Bond trading versus investing

Investing in bonds refers to buying bonds for the purposes of generating income through coupon payments in the long term. Bond trading is short-term speculation on the price of the bond moving up or down. 

If you are looking to invest in bonds, you will need a broker like Hargreaves Lansdown that allows you to own the underlying bond securities or own a ‘fractional’ bond though ETFs with Interactive Brokers. Some trading providers, such as IG Index, only allow you to trade bond price movements via Contracts for Difference (CFDs). With this type of financial instrument, you do not own the underlying bond securities.

Bond broker FAQs:

A bond broker is an investment platform or stock brokerage firm that offers access to bonds. Bonds can play an important role in a diversified portfolio.

Investing in bonds as a retail investor can be challenging without a bond broker. Unlike stocks, bonds aren’t traded on a centralised exchange. Instead, they are traded over the counter (OTC). Most bond brokers offer access to a wide range of bonds and fixed income securities, including government bonds, corporate bonds, and high-yield bonds.

Bond work like a loan where the issuer only pays back the interest until the end of the loan when the full balance is due.

The bond market is growing rapidly. What was once the preserve of institutional investors dealing with high numbers is opening up to more and more people dealing with much smaller volumes. SIPPS and ISAs are driving demand while online investment platforms are making pricing more transparent and allowing people to execute smaller deal sizes. More and more private investors are getting involved, so we’ve put together this guide to give you all the basics about the bond market, the opportunities, risks and why you should get involved.

If you wish to invest in bonds, you need to open an account with a bond broker. This is usually a straightforward process that can be done online.

To open an account with a bond broker, you will need to provide the broker with personal details such as your name, address, and National Insurance number. You will most likely have to provide identification such as a passport or driver’s licence, as well as proof of your address.

Once the account is set up, you will be able to fund your account. This can usually be done via card payment or bank transfer.

Once the account is funded, you will be able to start investing in bonds.

  • Bond brokers make money in several ways, including:

    • Trading fees. Most brokers charge commissions to buy bonds.
    • Price mark-ups. Many brokers keep inventories of bonds they have previously purchased through public offerings or on the open market. Because they own the bonds, they can mark up the prices when they are sold to investors.
    • Trading spreads. Spreads are the difference between the price to buy the bond and the price to sell the bond.
    • Annual account fees.

It’s sometimes possible to buy bonds without a broker. For example, in the UK, you can buy UK Gilts from the UK Debt Management Office.

There are several advantages of using a bond broker, however. The main advantage is that you will have more investment options.

Through bond brokers, you can generally buy a wide range of bonds, including:

  • Government bonds
  • Corporate bonds
  • High-yield bonds

However, the offering will depend on the individual broker.

Yes, you can invest in bonds through an ISA.

However, to comply with HMRC rules, bonds held within an ISA must be listed on a recognised publicly traded stock exchange, or the bonds must be issued by a company that is itself listed.

Yes, but it must adhere to certain requirements such as being listed on a recognised stock exchange and having a maturity of more than five years.

Most providers will allow you to include bonds as part of a SIPP.

Further reading: Compare the best SIPP accounts.

Bonds are generally seen as lower-risk investments. However, different types of bonds have different levels of risk.

For example, government bonds are considered to be lower risk than corporate bonds as the probability of a government defaulting on interest payments is much lower than the probability of a corporation defaulting on interest payments. High-yield bonds are generally considered to be higher-risk investments.

It’s important to understand that bond prices can rise and fall, and as an investor, you take on the risk that the value of your bonds could fall.

Yes, you can. The easiest way to do this is to open an account with a bond broker, deposit funds into your account, and buy the bonds.

It is possible to buy UK government bonds directly from the Bank of England without using the services of a bond broker.

However, the process is not that straightforward and you will need to register and be approved before you can do so.

You can buy bonds through a bond broker or online share dealing platform which make it easier and less expensive for individual investors to trade bonds. Specialised brokers tend to require a high initial deposit which might put it out of range for many people. Online brokerages are less expensive or you can try investing in bonds through mutual funds or exchange traded funds (ETFs) which invest in bonds. These operate in much the same way as stocks and shares.

If you’re buying on the open market you should remember you are buying bonds from other investors rather than from the issuers themselves. Broker fees can be easy to misunderstand. Even if a broker says they are commission-free they may quietly mark up the price. Most banks or brokers should allow you to buy government bonds direct, but if they don’t you can go directly through a Government agency.

Yes, investment bonds can usually be sold quite easily through bond brokers, although some bonds are less liquid than others. It’s important to be aware that if you sell a bond before its maturity date, you may get back less than you paid for it. That’s because bond prices can fall at times. A bond’s price can fall if interest rates rise or the issuer’s credit rating is downgraded.

As investors hunt for relatively low-risk returns in times of low interest rates, there  are more and more bond scams than ever before.  Generally, they are fake websites site up advertising double diget returns on well known brand names.

Further reading: Bond Scams: The rise of fixed income scams and how to avoid them

Yes, but many brokerages require high initial deposits. Online brokers are more accessible.

Bonds should form part of a diverse portfolio, so it’s not recommended to invest all your money in bonds. It’s easier than it used to be to invest on a smaller scale, but income may get swallowed up by dealing costs. To be viable, you may need to invest more than £1,000. Some bonds have minimum buy amounts.

Most issuers will display their credit ratings. Alternatively, you should be able to look them up on the websites of ratings agencies. Check out moodys.com/ and www.standardandpoors.com

Normally equities do better in the long term. However, at times of market volatility bonds can outperform equities. They also provide a more reliable income stream.

You will receive a pro-rate payment based on accrued interest.

If you hold it in an ISA or SIPP it may be part of your tax-free income. Gilts incur no capital gains tax and neither do most qualifying corporate bonds. Other bond income will have to be included on your tax return. 

You can buy bonds through a stockbroking account, or compare retail bond brokers here. They can also be kept in your SIPP account or stocks and shares ISA.

Yes, you can lose money on bonds. Although bonds are often seen as low-risk investments, it’s still possible to lose money on them.

One risk you face as a bond investor is that the issuer of the bond may not be able to repay some or all of its obligation. With government bonds, the risk of default is generally quite low; however, with corporate bonds, the risk is something to consider.

Another risk is that bond prices are constantly fluctuating and prices can move against you. If you need to sell a bond before its maturity and its price has fallen, you can lose money.

Finally, inflation is also worth considering. If you’re earning 2% from a bond and inflation is running at 2.5%, you’re losing money in real terms.

The easiest way to manage risk when investing in bonds is to own a diversified portfolio of securities.

Bond prices have an inverse relationship with interest rates. This means that when interest rates go up, bond prices go down, and when interest rates go down, bond prices go up.

The reason for this is quite simple. If interest rates are falling, older bonds that offer higher interest rates become more valuable, so their prices rise. Similarly, if interest rates are rising, older bonds that offer lower interest rates become less valuable, so their prices fall.

Given this relationship, the best time to buy bonds is when interest rates are falling. In a falling rate environment, bond prices tend to rise, generating extra gains for investors.

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