If you are purchasing a property, and you don’t have your deposit readily available, then a deposit bond may be a suitable solution. A deposit bond is a guarantee, issued by an insurance company, to the vendor of the property you are purchasing, that they will receive their 10% deposit, even if the purchaser defaults on the contract of sale. The deposit bond is used in lieu of cash. You, the purchaser, are able to provide this guarantee to the vendor by paying a small premium to the insurance company.
Some typical situations where you may need to use a deposit bond include:
- The vendor requires a 10% deposit but you only have 5% and you are borrowing 95% of the purchase price
- You have the deposit but it is tied up in investments and will take too long to liquidate
- Your deposit is coming from the proceeds of the sale of another property that is either settling before the purchased property or at the same time
- You have the deposit funds sitting in a term deposit but you will incur a penalty if you withdraw those funds
- You have funds available in redraw in your current mortgage but prefer to leave them in the loan to save on interest
- You are borrowing 100% of the purchase price using equity in another property but those funds won’t be available until settlement.
Types of Deposit bonds
We can assist you with the following types of home loans:
- Short term deposit bonds
- Long term deposit bonds
Please contact us for more information.