What is a Deposit Bond?
A Deposit Bond is a financial guarantee that is used in stead of the 10% cash deposit that is usually required to be paid by Purchaser when entering into a contract to buy Real Estate property. The Deposit Bond value can be for any amount up to 10% of the agreed purchase price. At settlement, the Purchaser must then pay 100% of the agreed Contract price plus acquisition costs.
In the event that a Purchaser can not complete the purchase and defaults under the terms of the Contract, the Vendor will become entitled to retain the deposit. As an unconditional guarantee the Underwriter is legally obligated to pay the Vendor’s/Depositholder’s claim on demand within the terms stipulated on the Deposit Bond. Once paid the Underwriter has full legal right of recovery against the Purchaser/s and any Guarantor/s.
Our Panel of Deposit Bond issuers ensure that our clients have a flexible safe way to transact property in the event where Cash is not available until settlement of the purchase of the property however, deposit requirements unde the contract can still be met. They are accepted nationwide across all Australian states and territories.
How Do Deposit Bonds Work?
It’s easy! You may be ready to buy your property or already found the one you want. However, you may not have ready access to the full deposit you are required to pay upon signing of your contract of sale, the property may be under construction with a longer than normal settlement term or your funds may be tied up as equity in other assets or longer term investments such as shares. Whether you have immediate access to your deposit or not there are several reasons why you may not be able to, or want to, use your own funds to pay your deposit. Quite simply a deposit bond is a form of a guarantee accepted by Vendors in lieu of a cash deposit. It defers the need to use your cash up front. At settlement you will be required to pay the full purchase price and any associated costs.
Like all services provided by Mortgage Choice at Oatley, we do all of the work for you. For more information please contact us.
Deposit Bond Issuer Panel - Mortgage Choice at Oatley