How a deposit bond helped this downsizer buy off the plan
How a deposit bond helped this downsizer buy off the plan
It’s a downsizer’s dream to be able to purchase a smaller home before selling the current one. The problem is, most of us will still need to find a deposit to make the dream come true, as Sydney-sider Angela Verad discovered.
Angela, 72, decided to sell her three-storey terrace house in Bondi and downsize with an off-the-plan property in the same area, located 6km east of the Sydney CBD. “Having a smaller place will give me the opportunity to lock up and travel,” she says. “I found an off-the-plan unit, but because I’m yet to sell my current home, I didn’t have the excess cash for the 10% deposit.”
Having worked in property for many years, Angela knew that a deposit bond would be an excellent alternative to bridging finance or a loan. A deposit bond is a simple and effective way of making sure that you can cover the deposit when you don’t have immediate access to the cash. The value of the bond is equal to the required deposit and it acts as a guarantee that the buyer will pay the vendor the deposit on settlement of the property. Then, when settlement occurs, the buyer pays the vendor the price of the property, including the deposit.
While they are a mystery to many buyers, Angela had experienced the ease of using deposit bonds before – albeit it many years ago – and didn’t hesitate to get in touch with Deposit Assure.
“One thing that Angela knew, but which many buyers don’t realise, is that deposit bonds can be used for off-the plan purchases,” says Etienne Rizzo, co-founder and director of Deposit Assure. “The first step is to check whether the developer will accept a deposit bond in place of a cash deposit.”
Buying off the plan usually requires the deposit bond to be issued up to the “sunset clause” date, which was the case for Angela. This is a provision in off-the-plan contracts that allows either the vendor or the purchaser to rescind the contract if the title to the property has not been created by a specific date.
Deposit Assure’s team worked closely with Angela to complete the application quickly. “They were excellent,” she recalls. “It was obvious I knew about deposit bonds, so they didn’t tell me how to suck eggs! They just focused on making the process easy.”
“Because I’ve been unwell and am practically retired, I couldn’t supply Deposit Assure with the standard payslips needed. But they understood where I coming from and managed to circumvent the issues I had to secure the deposit bond.”
Angela says there are lots of benefits to deposit bonds – especially if you are buying and selling at the same time. “I would definitely recommend deposit bonds in the right circumstances. If you can’t get the money right now, but know you will have it in time for settlement, deposit bonds could be the answer.”
If you’re looking to downsize or buy off the plan, like Angela, a deposit bond could help.
Got questions and need answers fast? This article answers the top 10 questions about deposit bonds.
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Seeing other people’s dreams come true is pretty magical. Especially when it could be you.