New South Wales couple David and Alison thought they had it all covered when they decided to buy a beautiful off-the-plan unit in Potts Point. But then everything changed.
When lawyer David and his wife Alison decided to downsize their property and upsize their lifestyle, they found an off-the-plan unit in Potts Point that would allow them to do just that.
The couple entered the contract and paid the deposit back in June 2016. But then their circumstances drastically changed.
“I’ve worked at a powerhouse law firm for most of my life and wanted a change. So I took the opportunity to leave my job and find something new. Just after we entered the property contract, I went on gardening leave,” explains David.
At the same time, the couple’s eldest child and his fiancée decided to buy a house, and, knowing how difficult it is to get on the property ladder, David wanted to help them out.
But with his income down, he needed a way to free up some cash. The challenge was that buying off the plan can be a lengthy process and the couple’s money would be tied up for a long time – especially because the sunset clause date isn’t until 2019.
“A loan wasn’t an option. I didn’t want to go into any further debt while between jobs. What’s more, even though I’ve been earning well for years, it doesn’t look good to the bank when you’re not working!” says David.
That’s when a friend told him about deposit bonds, something David – like many Australian homebuyers – had never heard of.
“I’ll be the first to admit I was naïve. I’d never come across deposit bonds and didn’t know how they worked. So the first thing I did was get online and find out as much as I could,” David recalls.
A deposit bond is a substitute for the cash deposit required between signing the contract of sale and settlement of a property. Just like a cash deposit, a deposit bond guarantees your commitment to an unconditional contract of sale. Then, at settlement, you simply pay the full purchase price, including the deposit bond amount.
“What I found was that deposit bonds are advertised as something you use when you first buy a property – it takes care of the deposit,” David explains. “But in our case, we had already bought the property. So I needed to know whether they could substitute the deposit we had already made.”
To David’s relief, the answer was yes. So he wasted no time researching deposit bond providers. The first company he approached promised that you could do everything online in minutes. However, he was bitterly disappointed.
“I had absolutely no correspondence, no one rang and I didn’t speak to anybody.
So, I asked a real estate agent friend who they’d recommend and they sent me to Deposit Assure.”
Deposit Assure provides deposit bonds backed by the AAA credit rated insurer, QBE Insurance (Australia). According to David, the experience with Deposit Assure couldn’t have been more different: “Once I’d filled in the online form, an expert was on the phone straight away!”
All David needed to do was supply his tax returns and supporting documents to Deposit Assure, and the concierge team took care of the rest. As required for off-the-plan properties, the deposit bond was issued up to the Sunset Clause date.
David’s solicitor then provided the deposit bond to the vendor’s solicitor, in exchange for his cash deposit. And the couple was in a position to provide their son with the funds to help purchase his first property.
“I can’t begin to describe how good Deposit Assure were,” David recalls. “They made the whole process smooth and easy. I wouldn’t hesitate to recommend them to anyone.”
While David and Alison wait for their property to be built, they are proud to say that their son is now a homeowner. However, he and his fiancée still haven’t moved out.
“They decided to rent out their new property and stay where they are!”
Interested in getting a deposit bond for your off-the-plan property? Want to help your kids out with a property?
Our deposit bond concierge team is on hand to answer your questions and guide you through the entire process, from start to finish.
Are you buying off the plan? Read our how-to guide on getting a deposit bond for your off the plan purchase.
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