Deposit Bonds
Let us take the stress out of purchasing your next property by helping you access Deposit Bond Providers to help you with your deposit while waiting for your property to sell.
A deposit bond in Australia is a financial guarantee used as a substitute for a cash deposit when purchasing a property. It assures the seller that the buyer will pay the full deposit at settlement, rather than upfront. Deposit bonds are commonly used in off-the-plan purchases, auctions, and standard property sales.
How Deposit Bonds Work
Instead of paying the required deposit in cash, the buyer provides a deposit bond, which acts as a promise to pay the deposit at settlement.
The seller (vendor) accepts the deposit bond as security.
At settlement, the buyer pays the full purchase price, including the deposit.
Key Features
No need for cash upfront – useful for buyers who have funds tied up in other investments.
Valid until settlement – typically aligns with the contract's settlement date.
Issued by insurers – financial institutions like Deposit Power or CBA-backed Deposit Bonds provide them.
For various property types – can be used for residential, off-the-plan, and some commercial purchases.
Types of Deposit Bonds
Short-Term Deposit Bonds (up to 6 months) – for quick settlements.
Long-Term Deposit Bonds (6+ months, up to 4 years) – commonly used for off-the-plan purchases.
Who Can Use a Deposit Bond?
Homebuyers with pre-approved loans.
Investors with equity in existing properties.
Self-employed buyers with financial backing.
Cost of a Deposit Bond
The cost depends on:
The bond amount (usually 10% of the property price).
The bond duration.
The provider’s fees.
Fees typically range from 1.2% to 3% of the deposit amount.
Risks & Considerations
The buyer is still liable for the full deposit at settlement.
If the sale falls through, the seller can claim the deposit bond from the issuer.
Some sellers may not accept deposit bonds (check before using one).