smart alternative to a cash deposit
Deposit Bonds are a smart, viable solution when purchasing an investment property, without needing to free up the cash for 10% deposit.
There a multiple reasons why buyers may prefer to use Deposit Bonds instead of the actual deposits for a property or investment:
- Loan funds for the purchase may only be available at settlement
- A buyer may also be selling simultaneously and is waiting for the sale funds to arrive
- Assets or cash may be tied up, or simply not available
- Savvy investors see Deposit Bonds as an efficient use of capital, rather than having a deposit sit in a trust for 2-3 years, they could use their cash elsewhere and earn higher returns
A Deposit Bond is an insurance policy. The deposit is guaranteed by the insurance company to the vendor (in property cases, this is the developer).
No money actually changes hands under the Deposit Bond. Instead, the purchase funds are paid in full at the time of the settlement. At that time, the terms of the bond are complete, the vendor receives the deposit with the transfer of the purchase funds.Contact Us Now
HOW DO DEPOSIT BONDS WORK?
A Deposit Bond is a smart, viable option for a number of situations or reasons. Most commonly, deposits bonds are used when:
- The property is off-the-plan. Talk to an APFG property agent to find out which of our projects are accepting Deposit Bonds.
- The purchaser is also selling, or waiting for funds to come through another source.
- The purchaser would prefer to keep the cash, where he/she can use it to earn a higher return.
- The purchaser has equity in homes and properties, but a limited amount of liquid assets.