Deposit BondsA Deposit Bond also known as a Deposit Guarantee is an alternative to a cash deposit that is payable when signing a contract to purchase residential property. A Deposit Bond is generally used in instances where you have cash tied up in other investments such as shares or a term deposit, or where you're waiting on the settlement of your existing property, or on borrowing 100% of the purchase price. You pay the full purchase price (which includes the deposit amount) at settlement. The Deposit Bond will be released following settlement.
The Deposit Bond will be available for deposits for up to 10% of the purchase price and is available for terms up to 36 months. The cost to purchase a deposit bond is approximately 1.5% of the deposit or guarantee amount paid to the underwriter as a once only premium before the bond is issued.
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