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Deposit Bonds

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When you enter into a new home contract, the vendor will probably need a 10% deposit when the contracts are signed.

A Deposit Bond is a guarantee that is used as a substitute for the 10% cash deposit you are required to pay upfront when purchasing a property.

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Deposit bonds are issued on the understanding that the purchaser will pay the vendor the Deposit Bond amount on the settlement date of the purchase. They are used when you have the means to pay the 10% deposit, but for one reason or another, you may not have immediate access to it.

When to use a Deposit Bond

  • if your current home has been sold but hasn’t settled yet; 
  • if you are borrowing more than 90% of the purchase price; or
  • if your money is tied up in a Term Deposit and to break it would be costly.

How much is a Deposit Bond?

  • The cost of a Deposit Bond depends on the amount and term of the Deposit Bond
  • For a $250,000 purchase, the deposit bond value is 10% (i.e. $25,000)
  • In this scenario, the Deposit Bond would cost $306
  • No security is required
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