What is a deposit bond?

Thinking of selling up and downsizing? Maybe the children have left home and you’re left with a house that’s too big. Or you want to free up some equity for new adventures. Before you can enjoy the freedom of a downsized home and upsized lifestyle, there’s one challenge you need to overcome: How will you pay the 10% cash deposit to secure your new property?

This is a problem for most people who are buying and selling at the same time - should you buy or sell first? You have the money, but it’s all tied up in your property. Perhaps your current home is not on the market yet, but you have already found your dream home and need to put a deposit down to secure it. If this is the case, you will want to know how long it takes to list your property for sale. This will mean you do might have access to the cash until the sale of your existing property has settled…and that could be months away. This can be frustrating. But there is a cost-effective and convenient solution to get you into your new home: A deposit bond.

Learn more in this video, where Joanne Danckwardt provides some key information on deposit bonds to allow you to work out if they are right for you.

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 What is a deposit bond?

A home deposit bond is a substitute for the cash deposit required between signing the contract of sale and settlement. Like a cash deposit, a deposit bond is used to guarantee the commitment of a buyer to the contract of sale. At settlement you simply pay the full amount, including the deposit and other costs (such as stamp duty)

Here are 3 things you need to know about home deposit bonds:

1.A deposit bond is not a loan, so there’s no interest.
There is no interest to pay on house deposit bonds – you only pay the one-off fee just before your deposit bond is released. To obtain a quote for your deposit bond please click here.

2.A deposit bond guarantees up to 10% of the purchase price
The deposit bond provider “guarantees” you for the deposit bond amount right up until you get the funds at settlement. It provides comfort to the vendor that you are committed to the sale. Always check with the real estate agent, developer or vendor to make sure they will accept a deposit bond instead of a cash deposit.

3.Deposit bonds are very versatile
Deposit bonds can be used for lots of situations:

• 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.

If you're ready to discover the secrets to being ready to sell your home, download our free insider secrets to being ready to sell checklist.

YES, DOWNLOAD MY CHECKLIST

If you feel you could benefit from our experience with buying and selling, we’d love to hear from you. Simply reach out.  We hope that has helped you today. If you have any questions, we’d love to talk to you. Our number is 0426 264 771. We look forward to talking to you soon.