FAQ

Here you’ll find answers to our frequently asked questions.

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What is a Deposit Bond?
A deposit bond is a substitute for the cash deposit required when buying a residential property. You simply pay the full purchase price at settlement. Learn more 
How long can deposit bonds be issued for?
Settlement dates vary significantly, which is why we offer two types of application. If you choose the Express application, which is ‘finance approved’, your deposit bond is valid for up to 6 months. Our Standard application, without ‘finance approval’, provides a deposit bond that is valid up to 60 months.
What happens if my property settles prior to the expiry date of the deposit bond?
Under Deposit Assure’s new policy, buyers will be eligible for a pro rata refund of their premium, where your purchase settles more than 6 months before the expiry date of the deposit bond, up to a maximum value of 18 months. To claim the refund, we must receive (a) written proof of the actual settlement; (b) the ‘original’ Deposit Bond; and (c) notice of your intent to apply for a refund within 45 days of the Settlement Date. A handling fee of $220 applies.

How much can deposit bonds be issued for?
There’s no real limit to the dollar figure. However, a deposit bond can never be issued for more than 10% of the purchase price. It can be issued for less than 10%, if the buyer has negotiated a smaller deposit or wants to pay part of their deposit in cash and pay the balance with a deposit bond.
The Buyer has sufficient net equity/worth to support the amount of the deposit bond sought. 
How quickly can deposit bonds be issued?

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. 

What happens if a deposit bond has been issued and exchange of contracts doesn’t proceed?
So long as the original deposit bond is returned to us within 30 days of issue, we will refund the cost of the deposit bond minus our issue fee.

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. A one off admin and processing fee of $200 will be charged to obtain a extension.

What happens when the deposit bond is issued for auction?
Applicants need to decide whether they are seeking a deposit bond for a particular property purchase or, if unsuccessful at that auction, they plan to remain in the market to purchase a different property.

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. A one off admin and processing fee of $200 will be charged to obtain a extension.

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. 

Are deposit bonds widely accepted by vendors, property developers and lenders?
 Yes. Deposit bonds have been around since 1987 and are now accepted Australia-wide. Some vendors, property developers and lenders will insist on QBE deposit bonds, as issued by Deposit Assure, because QBE has a strong track record and unique and important S&P A+ rating.
What types of real estate purchases can a deposit bond be used for?

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. 

What types of real estate purchases can't a deposit bond be used for?
We cannot issue deposit bonds in the following situations:

  1. 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.
  1. 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.
  1. An applicant has previously defaulted on a property settlement and the issued deposit bond has been claimed.
How do Deposit Bonds work?

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.

What happens if the buyer can’t settle or complete the Contract of Sale?
 The buyer will forfeit their 10% deposit. It’s important to remember that deposit bonds are a form of financial guarantee. Just because they are backed by QBE, they are not an insurance policy. In the event of not settling on a Contract of Sale, buyers can’t simply walk away from the deposit bond. They must repay the amount.

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.

What are the benefits of using a deposit bond over cash or bank guarantees?

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.

Apply for a deposit bond

circle-standard-bond

  • Settling over 6 months.
  • Purchasing off the Plan.
  • Purchasing in a Super Fund, Company or Trust.

Start Application

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