Time to Downsize? The One Property Tip Empty Nesters Need to Know

Thinking of selling up and downsizing? The kids have finally flown the nest, leaving you with a large impractically large property. What better time to sell up and invest in a property (and lifestyle) that works for you? It’s not downsizing, it’s right-sizing.

But before you can enjoy the freedom of a downsized home and upsized lifestyle, how will you pay the 10% cash deposit to secure your new property?

Baby boomers are typically asset rich but cash poor. So if you find yourself buying and selling at the same time, chances are you may not have the cash deposit until the sale of your existing property has settled.

Perhaps your house 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.

This can be an incredibly infuriating situation. But don’t let frustration eat away at you. A deposit bond could be the most cost-effective and convenient solution to get you into your new home.  

Firstly, 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.

Click here for to view your guide to deposit bonds (PDF Format)

3 fast facts about deposit bonds 

Fact 1 – A deposit bond is not a loan, so there’s no interest.

Fact 2 – It’s a substitute for a cash deposit required between signing the contract of sale and settlement.

Fact 3 – At settlement you simply pay the full amount. 

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

Let’s look at two possible scenarios:

SCENARIO 1: Buying and Selling

Do you intend to buy and sell at the same time, what we call a simultaneous settlement? Or perhaps you have an offer on your current property that settles prior to settlement on your new home?

But there’s a problem: you need to wait for the funds from your sale before you can secure your new property with a 10% cash deposit.

But wait, you know you have the equity and will soon have the cash to enjoy your retirement. How frustrating!

The good news is you can overcome this small hurdle by using a Deposit Assure deposit bond backed by QBE insurance. Think of the deposit bond as an IOU. Deposit Assure can issue you a deposit bond so long as you prove you will have the funds to complete your purchase at settlement. 

Because your house is under contract, we can issue your IOU in the form of a deposit bond certificate in a speedy 1-3 business hours. This guarantees you for the deposit you need up until you get your cash and receive the funds from your sale.

Watch this video to hear Deposit Assure’s founder, Etienne, talk more about how deposit bonds can help you get into your new home.  

What does it cost?

Let’s assume that the funds from the property you are selling will cover the full purchase price plus costs and you are settling within 6 months – this is the most likely situation. In this case, the cost of a deposit bond is simply 1.3% of the deposit amount you need. And this is a one-off fee only; there’s no interest or other charges. 

EXAMPLE

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

SCENARIO 2: Buying with intention to sell later

Let’s say you need to secure your new property and intend to sell your existing property later. Or maybe the settlement is more than 6 months away.

We can still issue your deposit bond based on the equity in your existing home without you needing to fund or use your own cash for the 10% deposit. So long as you have the required equity in your existing home, a deposit bond can be issued within 24 hours of lodgement with Deposit Assure. 

What does it cost?

Use our free online calculator to find out how much your Deposit Assure deposit bond will cost. Simply enter the deposit amount required and the length of the term.

Want to know more or apply?

Get in touch with our deposit bond concierge team. We’ll assess your situation and, if a deposit bond is what you need, we will take care of your application for you. Our concierge officers will guide you through the entire process from start to finish. Easy!

LET’S GET STARTED!