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What is a deposit bond?

You might not have access to the cash deposit required to secure a property, or prefer an alternative to using your own cash that is cost-effective.

For instance, this might be when:

  • Proceeds from the sale of your current home are not yet available for a deposit.
  • As a first home buyer, you don’t have the deposit required in cash.
  • Loan funds from an investment aren’t available until settlement.
  • Have shares or a fixed-term investment and don’t want to pay a penalty.
  • Don’t want to set aside funds for each auction you might want to attend.

Fast and Simple

Applications are generally processed within 24 hours.

Economical – just one fee, no interest

A deposit bond can save you money. The fee for a $30,000 Short Term Guarantee (bond) is $360. Short term finance can cost $727 (based on an application fee of $450, generally 1.5% of the principle, and $277 in interest, based on 8% over six weeks). You save $367 by using a deposit bond

Insurer Or Bank Guaranteed

The deposit bond will guaranteed by a bank or insurer, meaning it is secure and can be relied upon to sign a contract, as it cannot be cancelled.

 

How does a deposit guarantee work?

Depending on whether the purchase is a Private Treaty or Auction, the process for purchases may differ slightly.

Auction​

  • Ensure sufficient funds will be available to fulfil the contract (approved finance, existing funds available, confirmed sale of current property).
  • Prior to auction, conduct all required checks.
  • Ensure that both the auctioneer and vendor will accept a deposit bond 2 business days in advance of the auction.
  • Apply for deposit bond, including a copy of the contract and any other required documentation.
  • Issuing of deposit bond approval.
  • Bid successfully at auction. (If unsuccessful, deposit bond will still be valid for other auctions).
  • Sign contract, including details of the deposit guarantee.
  • Stakeholder (Real Estate Agent/Solicitor) given deposit bond as deposit.
  • Exchange of contracts.
  • Full purchase price paid on settlement, including the deposit bond amount.

Private Treaty (Non-Auction)

  • Determine property to be purchased and agree price with agent/vendor
  • Ensure sufficient funds will be available to fulfil the contract (approved finance, existing funds available, confirmed sale of current property).
  • Apply for deposit bond, including a copy of the contract and any other required documentation.
  • Issuing of deposit bond approval.
  • Sign contract, including details of the deposit guarantee.
  • Stakeholder (Real Estate Agent/Solicitor) given deposit bond as deposit.
  • Exchange of contracts.
  • Full purchase price paid on settlement, including the deposit bond amount.

 

If you would like any further information live chat with the Naritas team now or enquire online.