RBA Cash Rate: 4.35% · 1AUD = 0.67 USD · Inflation: 4.1%  
Select Portfolio Finance

1300 227 577

Close this search box.

What Are Deposit Bonds?

If you are purchasing a property, and you don’t have your deposit readily available, then a deposit bond may be a suitable solution. A deposit bond is a guarantee, issued by an insurance company, to the vendor of the property you are purchasing, that they will receive their 10% deposit, even if the purchaser defaults on the contract of sale. The deposit bond is used in lieu of cash. You, the purchaser, are able to provide this guarantee to the vendor by paying a small premium to the insurance company.

Some typical situations where you may need to use a deposit bond include:

  • The vendor requires a 10% deposit but you only have 5% and you are borrowing 95% of the purchase price
  • You have the deposit but it is tied up in investments and will take too long to liquidate
  • Your deposit is coming from the proceeds of the sale of another property that is either settling before the purchased property or at the same time
  • You have the deposit funds sitting in a term deposit but you will incur a penalty if you withdraw those funds
  • You have funds available in redraw in your current mortgage but prefer to leave them in the loan to save on interest
  • You are borrowing 100% of the purchase price using equity in another property but those funds won’t be available until settlement.

Types of Deposit bonds

We can assist you with the following types of home loans:

  • Short term deposit bonds
  • Long term deposit bonds

Please contact us for more information.

Download our First Home Buyer Guide. It includes over 40-pages that'll guide you on your property purchase journey.

  E. Australia Standard Time [ UTC+10, Default ] [ CHECK TO CHANGE ]

  Want to have a no-obligation discussion?

Related FAQs:

Black Piggy Bank

What is the Consumer Price Index (CPI)?

Inflation is an increase in the level of prices of the goods and services that households buy. It is measured as the rate of change of those prices. Typically, prices rise over time, but prices can also fall (a situation called deflation).

Read More »
Blue Money Box

How is the Cash (Interest Rate) Determined?

Monetary policy involves using interest rates to influence aggregate demand, employment and inflation in the economy. It is one of the main economic policies used to stabilise business cycles. The Reserve Bank is responsible for monetary policy in Australia ..

Read More »
Mother and Son Painting

How is Compound Interest Calculated?

Compound Interest is the addition of interest to the principal sum of a loan – basically meaning that you pay interest on interest. Compound interest is standard practice when taking out a home loan.

Read More »

Share this FAQ

Share on Facebook
Share on Twitter
Share on Linkdin
Share on Pinterest