How a Deposit Bond Can Help Downsizers

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Thinking of selling up and downsizing? Maybe the kids have just flown the nest and you’re left with a house that’s far too big. Or you want to free up some equity for new adventures.

Before you can enjoy the freedom of a downsized home and upsized lifestyle, there’s one challenge you need to overcome:

How will you pay the 10% cash deposit to secure your new property?

This is a problem for most people who are buying and selling at the same time. You have the money, but it’s all tied up in your property and assets.

Perhaps your current home is not even on the market yet, but you have already fallen in love with a new place and need to put a deposit down to make sure it’s yours.

You won’t have access to the cash until the sale of your existing property has settled…and that could be months away.

We get it – this can be an incredibly infuriating situation. But there is a cost-effective and convenient solution to get you into your new home:

A deposit bond.


What is a deposit bond?

A deposit bond is a substitute for the cash deposit required between signing the contract of sale and settlement. Like a cash deposit, a deposit bond is used to guarantee the commitment of a buyer to the contract of sale.

Here are 3 things you need to know:

a. A deposit bond is not a loan, so there’s no interest.

b. A deposit bond is a substitute for a cash deposit required between signing the contract of sale and settlement.

c. At settlement you simply pay the full amount, including the deposit and other costs (such as stamp duty)


How can a deposit bond help you get into your new home? 


Let’s look at two possible scenarios:

1. You’re buying and selling at the same time.

The problem is you need to wait for the funds from your sale before you can secure your new property with a 10% cash deposit. But you know you have the equity and will soon have the cash.

You can use a deposit bond in place of a cash deposit, so long as you can prove you will have the funds to complete your purchase at settlement.

What does it cost? If you are settling under 6 months, the cost of a deposit bond is simply 1.3% of the deposit amount you need. This is a one-off fee only – there is no interest or other charges. For example:

$50,000 deposit bond with less than 6 months settlement = $650 one-off fee (approximately)

To get an instant quote for your deposit bond please click here.


2. You’re buying with the intention to sell your existing home later

Let’s say you need to secure your new property, but you haven’t put your current property on the market yet, or maybe the settlement is more than 6 months away.

You may be eligible for a deposit bond based on an assessment on the income and equity you have in your existing home. No need to use your own cash or a personal loan for the 10% deposit.


Are you in a frustrating situation without access to a cash deposit? Talk to our team and find out how we can help. 

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