Deposit Bonds

Have you found the property you want to purchase but your cash is tied up in your present home or other assets? Although you may have the 10% deposit required to secure your purchase, it may be in the form of shares you have to sell, a term deposit which has not matured yet or you may want to utilise equity from existing property or other investments.

If you find yourself in one of the above situations, then a deposit bond may be an alternative for you. A Deposit Bond is a bond or guarantee which acts as a substitute for a cash deposit on the purchase of a property.

Advantages for the Buyer

Like many property owners today, most of your cash is probably tied up in your present home. Trying to find money for the deposit required to enter into a contract with another property can mean either a short-term bank loan or borrowing from a finance company at high interest rates. Regardless of where you obtain the finance, the interest charge, establishment fee and other upfront costs connected with the loan can be expensive and time consuming to arrange.

A Deposit Bond is often less expensive and is usually approved and issued within 24 hours of your application, thus enabling you to quickly enter into a contract on your new property.

Deposit Bonds can be particularly useful at auctions. It is often difficult to organise your cash deposit before an auction sale, especially when you are not sure whether your bid will be successful or not. The Bond amount is fixed but not the property details so you can attend a number of auctions. You simply complete the seller and property details if you are the successful bidder.

If the completion of a property is months or even years away, the Deposit Bond ensures the purchaser secures the property without the outlay of a 10% cash deposit until the property is ready to settle.