Here you’ll find answers to our frequently asked questions.
Got a question that’s not on the list? Let us know and we’ll get back to you as soon as we can.
The Buyer has sufficient net equity/worth to support the amount of the deposit bond sought.
Fast! If we receive complete paperwork and credit card payment by 4pm AEST, we can issue the deposit bond within one hour on the same business day. Otherwise, we can issue it overnight or first thing on the next business day. We must have cleared funds before releasing the deposit bond.
If paying by EFT, we have to wait up to two business days for the funds to clear. Applicants need to allow for this delay if seeking a deposit bond by a particular date e.g. auction day.
If for one particular property, we’ll issue the deposit bond with the buyer and vendor names, the property location, and the amount of the bond required.
If the buyer bids more than expected and the 10% value of the deposit bond isn’t enough, the buyer can top up the difference with cash.
If the deposit bond is issued as an ‘open bond’ (for auctions), there’s no refund and the bond remains valid to be used up to the Expiry Date noted on the deposit bond. The deposit bond can be extended, if the settlement date goes beyond the Expiry Date on the deposit bond.
If the buyer wants to use the deposit bond for another property, we recommend that applicants acquire a deposit bond for at least 6 months, as it costs more to reissue than it does to obtain a 3 month deposit bond. We’ll issue the deposit bond with a blank space for the vendor and property location, so this can be added if successful at auction.
Deposit bonds can be requested by individuals (including first home buyers), trusts, self managed super funds, business entities, partnerships and other parties looking to purchase Australian-based residential or commercial real estate.
The real estate can be vacant land, established property or off the plan.
- The settlement period is greater than six months and the property being purchased is located in a town with a population of less than 50,000 people.
- The property being purchased is part of a complex where the apartments are independently owned but are on-lease to a proprietor to operate as a hotel or similar.
- An applicant has previously defaulted on a property settlement and the issued deposit bond has been claimed.
Here’s an example:
Sandra and Gary are buying a home. They have already received unconditional finance approval for their new home, using a family guarantee from mum and dad.
They enter into a contract to purchase a property for $700,000 on terms of a 90-day settlement and a deposit bond for 10% of the purchase price.
The property price is 700,000 so they lodge an application for a Deposit Assure Bond for 70,000 (10%).
Provided the application is successful, Deposit Assure will issue a deposit bond certificate to guarantee their deposit and secure their new property. We simply charge a one-off fee to issue the bond.
Once settlement arrives, Sandra and Gary pay the full amount of $700,000 to the vendor, plus stamp duty and the other usual costs. And the deposit bond expires.
As part of the application form and process, the buyer also acts as a guarantor and agrees to indemnify QBE in the event the deposit bond is called by the vendor as a result of a failure to settle/complete the Contract of Sale. The buyer must repay QBE the full amount of the deposit bond and any legal costs incurred, plus face the risk a default listing on their credit rating.
There are many reasons why you could benefit from a deposit bond:
- Buyers are borrowing 100% of the purchase price with the loan funds only available at settlement
- Buyers do not need to have the cash deposit to secure a property
- Buyers or investors have their assets tied up in property and are cash poor
- The cost of a deposit bond can be cheaper than borrowing the funds to pay a cash deposit.
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What supporting documents do you need to get a deposit bond? Why do you need them? And how do you supply them? Find out everything you need to know about supporting documents in this guide.Read More