Vision Finance and Property
Chartered Accountants & Business Advisors
Super Back Office

Deposit Bonds

 

 

Who is Vision Bonds?

Vision can also arrange deposit bonds for home loan clients. Deposit bonds have become a very popular tool for exchanging contracts when people decide they want to buy a property.

FAQ on Deposit Bonds

What is a deposit bond?
A deposit bond is an insurance policy or a guarantee. It is a substitute for the 10% cash deposit traditionally required to exchange contracts on a property.

How does it work?
The vendor agrees that they are happy to exchange contracts via them receiving a deposit bond from you instead of 10% of the purchase price.

You apply for a deposit bond. If you are approved you will be required to pay for the bond (like an insurance premium). This ensures your money is left working for you and you’ll pay nothing more until you settle on your purchase.

Who is being insured?
A deposit bond is an insurance policy that protects the vendor. In the event that you are unable to meet the terms of settlement then the insurer will pay the 10% cash deposit to the vendor.

The deposit company will then chase those monies from you.

Why do people like deposit bonds?
A deposit bond ensures that your money is left working for you. By using a deposit bond, you do not have to sell your shares, close your term deposit and lose interest, or wait to sell your present property to get the deposit you need for purchase.

When buying ‘off the plan’ completion is often years away – why tie up your money?

Is a deposit bond secure?
The vendor is usually just as eager as you are to secure the purchase. Using a deposit bond ensures that the deposit will be paid at settlement. We do recommend you obtain legal advice prior to exchanging using a deposit bond.

Who uses them?
They are generally popular among people who:

  • Are buying a property off the plan
  • Are waiting for funds to come through from another source
  • Are investors wishing to borrow 100% of the purchase price of the property
  • Have equity but do not have liquid assets

Why use Vision?

  1. Experience - Vision has organised well over 500 deposit bonds and is very experienced in the deposit bond process.
  2. Only one lot of supplying paperwork – you can organise your home loan and deposit bond in one hit – that means you only need to provide one lot of documentation
  3. Bond providers are different – they have different policies and prices – we are able to direct you to the appropriate supplier. We deal with a number of different deposit bond agencies and underwriters.
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