Deposit Bonds: Do You Need Cash For a Home Deposit?

One of the more common problems that home buyers face is not having enough cash to guarantee their purchase. Deposit Bonds are one solution to this problem.

Sometimes you can’t unlock the equity in an existing asset such as your home or investment property. Sometimes times you don’t want to use extra / bridging finance such as when you’re trying to sell and buy at the same time.

Sometimes you aren’t able to get the funds together quickly enough to secure the new property. This often happens when you want to go to auction or when you have to act quickly on a private treaty sale.

Other times, you don’t physically have the cash as is the case of off the plan purchases where the property will not settle for another 12, 24 or 36 months. You will save up during this time.

A deposit bond can help in all of the above scenarios.

What Is a Deposit Bond?

A deposit bond is a substitute for the cash deposit you are required to pay when you purchase a property. The deposit bond is used instead of your own cash / savings for the period between signing the contract of sale and settlement.

Like a cash deposit, a deposit bond is used to guarantee your commitment as a buyer to the contract of sale.

How Does a Deposit Bond Work?

The video below from Deposit Assure will take you through how deposit bonds work.


Benefits of Using a Deposit Bond

  • Cost effective – they provide are more cost-effective solution compared to bridging finance
  • Convenient – you can absolutely be ready to bid at auctions or act on a private sale to secure the property you want
  • Flexible – can be used at auctions or buy off the plan
  • Short or long-term deposit guarantees can be used to secure properties with settlement terms available for 6 to 48 months
  • Less headaches – using deposit bonds helps reduce the stress on your cash flow

If you are thinking about purchasing property but don’t quite have the whole deposit together, contact us and we can see if a deposit bond based solution is right for you.

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