Struggling to get access to a 10% cash deposit for your property purchase? You’re not alone.
What is a deposit bond?
Also known a deposit guarantees, a deposit bond is used in place of the cash deposit required between signing the contract of sale and settlement.
What it is not?
Why use a deposit bond?
Deposit bonds are a smart option if you want to purchase a property but don’t have ready access to a cash deposit – but you will by the time of settlement. You might be a first home buyer who simply doesn’t have enough cash sitting in the bank for the deposit. Or you might be downsizing to a smaller property, but because you haven’t yet sold your current home, your deposit is still tied up.
Here are 3 facts you need to know about deposit bonds:
Fact 1: A deposit bond guarantees up to 10% of the purchase price
A deposit bond provider “guarantees” you for the deposit bond amount right up until you get the funds at settlement. In other words, it gives comfort to the vendor that you are committed to the sale. The most important thing is that you always check with the real estate agent, developer or vendor to make sure they will accept a deposit bond instead of a cash deposit.
Fact 2: You pay no interest
Fact 3: Deposit bonds are very versatile
- To buy a home, vacant land, commercial property and off the plan.
- For settlements of less than six months or more than six months.
- For private treaty sales and auctions.
- Whether or not you currently hold finance approval from a bank or lender. If you don’t, you may still be eligible by assessing your income, assets, and liabilities to verify that you will have the funds to settle on your purchase.