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.
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.
$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!
Are you a first homebuyer wondering how a deposit bond can help you? Not sure what to do next? Read on..
There are a few differences between auction bonds and deposit bonds that matter. Choose the right one now and you could save time and hassle down the track – not to mention get ahead of the competition.
From application to closing, we walk you through what you can expect during the deposit bond process.
So you’re thinking of getting a deposit bond? Whether you’re a first-time home buyer, downsizing or buying off the plan, chances are you have a few questions. Learn all the facts before you start…
Want to get out of renting for good? You’re not alone. Buying a home is now on the list of top New Year resolutions for Australians.
Need to secure your off-the-plan purchase but don’t have access to a cash deposit? Our quick how-to guide for deposit bonds could be the stress-free solution you’re looking for.