Deposit Bonds
What is a Deposit Bond?
In Australia when a person or entity enters into a contract to purchase residential property, it is common practice for the purchaser to lodge a cash deposit of up to 10% of the purchase price with the vendor's solicitor as security for the purchaser's obligations. The deposit gives the vendor (the seller) a fund...
Read MoreWhy are Deposit Bonds so popular?
A Deposit Bond can be a quick and efficient way of arranging the deposit for the purchase of a residential property. Arranging a cash deposit may take time, especially if the purchaser has not sold their current property or needs to sell investments to raise the required deposit. Deposit Bonds enable purchasers,...
Read MoreWho can use a Deposit Bond?
The product is suitable for virtually anyone contemplating the purchase of a residential property including: (i) future home buyers; (ii) home owners upgrading to a new property; (iii) investors wishing to purchase property or additional properties; (iv) owners or investors wishing to purchase properties off the plan. The product is...
Read MoreWill Vendors accept Deposit Bonds?
There should be no reason why a vendor should not accept a Deposit Bond in lieu of a Cash Deposit. However, most "Standard" Contracts for Sale provide for a cash deposit to be paid. Therefore, before you agree to purchase a property (or bid at an auction) check with the vendor that they will accept a Deposit Bond...
Read MoreDoes a Deposit Bond replace the deposit?
NO. A deposit bond is a guarantee that the deposit will be paid at a future date. Deposit bonds are underwritten by an insurer that guarantees the vendor that the deposit will be paid in full at settlement. The purchaser is still required to pay the deposit in full. The deposit bond saves the purchaser from the need to...
Read MoreHow long can a deposit bond be arranged for?
Deposit bonds are split into two types: Short term bonds for three and six month periods; these are ideal for purchasers buying at auction. Long term bonds which are generally issued for periods of twelve months through to thirty six months (some bonds are issued for periods longer than this, up to 48 months);...
Read MoreWhen does the Deposit Bond terminate?
The Deposit Bond expires on the earliest of: (i) the contract for Sale being completed; (ii) the Expiry Date; (iii) the Contract for Sale being terminated or rescinded and the purchaser being entitled to a refund of the deposit; (iv) payment to the Vendor by the Insurer of The Maximum Bond Amount or such part as the...
Read MoreWhat information is required for an application?
This varies depending on the bond term. However, typically a deposit bond can be arranged quite simply by submitting a simple application form and supporting documents.
Read MoreImportant Notes
The information given here is designed to give answers to the basic questions. More detailed information is available on request. IT IS NOT INTENDED TO PROVIDE A COMPREHENSIVE OUTLINE OF THE PRODUCT OR OF THE OBLIGATIONS AND TERMS OR CONDITIONS
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