Katrina Parrington

Mortgage & Finance Broker, Elders Home Loans – Northern Territory – P. 8932 8900

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  • Elders Home Loans

  • Katrina Parrington

    I am a long term Centralian resident with more than 18 years experience in the financial services industry. Initially, in Real Estate in Adelaide before pursuing a career with Elders Insurance Alice Springs and lending roles with major banking institutions where I gained extensive experience in Home Loans and Commercial Lending here in the Alice and in Darwin.

    I have a unique set of skills that ensures I understand your lending needs and can provide you with professional advice and personal service.

    Tel: 08 8953 8800
    email: katrina.parrington@eldershomeloans.com.au

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From the latest Elders Home Loans Northe

Posted by Katrina Parrington on September 25, 2013

From the latest Elders Home Loans Northern Territory newsletter.

The Power of Deposit Bonds

A Deposit Bond offers a quick and convenient way to offer a deposit for the purchase of a property if you don’t have the cash on hand.
Rather than paying the full 10 per cent deposit you would normally have to produce up front, you hand over a deposit bond, which is a guarantee that the deposit will be paid at a future date. Deposit bonds are underwritten by an insurer to guarantee the vendor that they will be paid their deposit in full at settlement even if the purchaser defaults on the contract of sale.
They are in effect a form of credit because when the time comes to settle, you will still have to produce the balance of the purchase cost, plus the 10 per cent deposit that was covered by the bond. Once issued, deposit bonds can’t be refunded, and if you default you are responsible for paying costs and penalties.
The fee for a deposit bond is usually around 1 per cent of the deposit price, but it’s not money for jam as your finances still have to be approved by a lender to ensure you have the funds available to complete the purchase.
Why use a deposit bond?
If you have the money to buy property but it’s tied up in other investments, then a deposit bond will save you the hassle of accessing those funds until you really need them, for example:
• You’ve just sold your home but the sales funds aren’t yet available for the deposit on your next purchase.
• You plan to attend a number of auctions and don’t want the hassle of arranging a bank cheque each time.
• You are borrowing 100% of the purchase price of a property using equity in another property and you don’t have the cash immediately available to use as a deposit.
• You have your deposit tied up in shares or managed funds and don’t want to liquidate immediately.
• You would prefer your deposit to earn interest before settlement.
• You want to buy off the plan and use the time to keep your money earning interest elsewhere.
How long are they valid for?
Short term bonds are offered for three and six month periods, which are ideal for purchasers buying at auction. Long term bonds are issued for periods of twelve through to 48 months for projects that are yet to be built.
As your mortgage adviser we would be happy to provide you with more detail on deposit bonds and how they might work to your advantage.

Did you Know?
Not all vendors accept deposit bonds. Before you agree to purchase a property or bid at an auction, seek the real estate and vendor’s agreement. The relevant legal clauses may need to be inserted into the sales contract to enable the deposit bond to replace the cash deposit.


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