What is a Deposit Bond?

What is a Deposit bond?

A deposit bond replaces the deposit you are required to pay when the home you are buying is “exchanged” (that is, when you’ve signed the contract without a cooling off period, or your cooling off period has expired).

What it is essentially is an insurance policy that you buy & hand over to the seller with the promise that you will pay them the full purchase price at settlement. As such treat it like actual cash – once you’ve handed it over you are obliged to pay that money & if something goes wrong the issuer will be chasing you to cover the deposit at least.

A bond is useful if you don’t have the actual cash available to pay the deposit at that time – which may be because you’re waiting on a sale, a term deposit to mature, a refinance, or you’re borrowing the full value of this place. Often investors also weigh up the costs for the bond vs the return for leaving their money in an investment when they are buying off the plan.

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Two Red Shoes Copyright © 2020 All rights reserved. Call on 02 9002 0380, 0404 494 929, email us  or 'old school' fax 02 9002 0381

Jarrett Group Pty Ltd atf Jarrett Group Discretionary Trust trading as Two Red Shoes hold Australian Credit Licence No: 428614 and are members of an external dispute resolution scheme. Details of our complaint resolution process can be found here or please see our credit guide. All information contained on this site is general information only, and does not take into account your particular financial situation or needs. You should consider your personal objectives, financial situation along with the recommendations of your trusted advisors.

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