A Deposit Bond is a substitute for the cash deposit required when purchasing a residential property.  It can be issued for all or part of the deposit amount required, up to 10% of the purchase price.  At settlement, you simply pay the full purchase price.

In many cases, you may not have ready access to the cash deposit required to secure a property or may prefer a more cost-effective alternative to using you own cash.  This may happen when you:

  • Have sold your current home but funds are not yet available for the deposit
  • Are a First Home Buyer and don’t have the full 10% cash deposit required
  • Are an investor and the loan funds are not available until settlement
  • Do not want to pay the penalty for breaking a fixed investment or selling shares
  • May want to attend more than one auction before you decide which home to purchase
  • Prefers to keep your savings earning interest until settlement
  • Want a cheaper and quicker solution to arranging a deposit, than securing short term finance.

Murray Home Loans is an accredited agent for Deposit Power.  Deposit Power was established in 1989 has grown to become the market leader in the deposit guarantee market and has assisted over 750,000 Australians to buy property.  It is also widely used by the majority of home loan lenders.

Deposit Power offers short term guarantees to suit settlement terms of up to 6 months, and long term guarantees for settlement terms of between 6 and 48 months, which suit purchasers who are buying off the plan, properties under construction or land which is not yet registered and with extended settlements.

How does a Deposit Power Guarantee work?

A deposit bond means that when you are purchasing a residential property, you do not have to pay the deposit in cash when the contracts are signed.  Before being issued with a guarantee, the purchasers need to demonstrate their ability to settle and understand it does not remove their obligation to pay the deposit, it just delays it until settlement.

What is the cost?

Short term guarantees cost a flat 1.3% of the deposit amount.

Long Term guarantees vary depending on the amount and the length of time required.

At Auction

A deposit bond can be used to purchase a property at auction.  The bond needs to be applied for and approved prior to auction, and will set you up with a maximum guarantee amount.  Please note:  The acceptance of a deposit bond in lieu of a cash deposit is at the vendor’s discretion, so we strongly recommend the purchaser advises the real estate agent or auctioneer prior to attending the auction.

If you need help arranging a deposit bond or would like to know more information please contact us.