The 10 Most Common Questions About Deposit Bonds Answered

30 Jan

A deposit bond is a substitute for a cash deposit when purchasing property. It acts as a guarantee to the seller that you will pay the deposit at settlement, without needing upfront cash. This can be useful for buyers who have funds tied up elsewhere or are waiting for settlement proceeds.

1. When Do I Pay Back the Deposit?

You don’t! A deposit bond ensures the deposit is paid at settlement. The only upfront cost is the deposit bond fee.

2. How Much Does a Deposit Bond Cost?

For settlements under six months, the one-off fee is 1.3% of the deposit amount. Longer settlements may vary.

3. Do I Pay Interest?

No! A deposit bond has a single upfront fee with no ongoing interest payments.

4. How Quickly Can a Deposit Bond Be Issued?

Pre-approval can take 15 minutes, with the bond issued in under one business hour once signed and paid.

5. Am I Eligible?

Eligibility depends on your financial situation, but common requirements include:

Finance approval (formal or conditional).
Selling a property where proceeds cover the purchase.
If finance isn’t approved or settlement is over six months, an asset, income, and liability assessment is required.

6. Can First-Home Buyers Get One?

Yes! If you have formal loan approval via a family guarantor loan, a deposit bond is possible. If not, a guarantor with property equity is needed.

7. How Long Should a Deposit Bond Be Valid for Off-the-Plan Purchases?

Generally, up to the sunset clause date in the contract. A pro-rata refund (up to 18 months) may be available for early settlements.

8. Do Vendors Accept Deposit Bonds?

Always confirm with the real estate agent or seller before proceeding.

9. How Is a Deposit Bond Different from a Bank Guarantee?

Deposit bonds are unsecured, while bank guarantees require real estate or cash security.
Deposit bonds have a one-off fee; bank guarantees may have ongoing costs.
Deposit bonds are faster and involve less paperwork.

10. What Documents Are Required?

Typically: