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Alison M.
Alison M.
Lilyfield, NSW
20 Likes
5 Followers

I've been told I can use a deposit bond instead of cashing in some investments to buy a property, is that possible?

6 years ago
Comments

True. The bond will cost you 1.3% of the bond amount, & substitutes cash until settlement, when the full purchase price is payable.

Responses

Hi Alison
In short yes this is true. Some real estates may not accept them as some vendors don't like them. If it's a brand new Propety that you are purchasing you would need to find out of the developer will accept this instead of actual cash.
Bear in mind that when the Propety is due to settle you will need to have those funds available to pay back the deposit bond issuer.
Hope this helps & please feel free to contact me if I can be of any further assistance

Hi Alison.
A deposit bond is a form of guarantee issued by an insurance company and takes the place of cash at the time of exchanging contracts.
At settlement the purchaser is required to pay over the full purchase price and the bond ceases to have any value.
Any purchaser who uses a bond to exchange a contract and who then subsequently fails to complete the purchase will still forfeit an amount of 10% of the purchase price.
The only difference is that the purchaser would pay that forfeited amount to the insurance company as the vendor would receive the value of the bond from the insurance company.
You need to determine if the income from your investment exceeds the cost of the bond.
Hope this provides a brief overview of a deposit bond.

Comments

Thank you Stephen

Hi Alison

A deposit Bond is a form of guarantee to the vendor. The bond is used to exchange contracts in lieu of you handing over a cheque for your 10% deposit.

You will still need to eventually pay the 10% deposit either before or at settlement.

Please feel free to contact me if you would like further information.

Comments

Thank you Sam

True. The bond will cost you 1.3% of the bond amount, & substitutes cash until settlement, when the full purchase price is payable.

Yes
Use a broker
The agent also will need to agree as a part of the contract offering

It certainly is.
If you want to know more please don't hesitate to contact me.

Kind regards
Jennifer Bachir

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