January 25, 2018 by Hayley Dunning
Sometimes you may not have the funds readily available to put down a deposit for the property you wish to buy.
In this instance, it may be beneficial to consider a deposit bond to prevent the need for bridging finance or the possibility of missing out on your dream home.
A deposit bond is somewhat of an insurance policy. It is a document that states that the deposit amount will be paid to the vendor (seller) upon settlement. There are a multitude of instances where a deposit bond may be used;
When purchasing an off-the-plan property: If you’re purchasing off-the-plan, then that property may not be completed for a few months or even years. In this case, rather than put down a deposit while still waiting for the house to be built, a deposit bond may be used.
When in the process of selling a property: If you’ve found the perfect home for you but have yet to sell your current residence, this may be a better option then bridging finance. In this scenario, the deposit bond would be used to ensure the vendor of the new property will receive the deposit upon the successful sale of your property.
When the buyer doesn’t have available funds: There may come a time where you find the perfect property but just don’t have the money available to pay your deposit. If you’re a first home buyer who doesn’t have the full 10% deposit required, a deposit bond could ensure you don’t miss out on your dream home.
When planning to bid at an auction: If you’re looking to bid at either one or multiple auctions, a deposit bond could be a great option. The vendors details can be left blank, meaning that the bond can be used when bidding at more than one auction. Be sure to discuss your desire to use a deposit bond with the auctioneer before bidding to ensure it will be accepted.
Benefits of a deposit bond include:
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No upfront cash, money continues to earn interest in your account.
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Quicker and easier option than bridging finance when waiting on the sale of a property
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Can be used when bidding at multiple auctions
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Ensures you won’t miss out on your desired property
If you’re interested in discussing a deposit bond, call your local mortgage broker, Brice Booker, on 07 3211 7744 or book an appointment online here.
