To make it easier for property buyers to enter the property market, Deposit Assure has launched a new deposit bond product that can be used as an alternative to cash, to secure a property with no upfront cost.
“When buying a property or land, you typically have to provide a cash deposit – normally up to 10% of the purchase price. This deposit is used to guarantee the commitment of the buyer to the contract of sale. If you are looking to buy, but do not have ready or convenient access to the deposit required, a deposit bond may be a good alternative. In particular, deposit bonds are attractive to people who are buying and selling simultaneously, who have assets tied up or those who only have funds available upon the property’s settlement,” said Mr. Etienne Rizzo, CEO Deposit Assure.
The new Deposit Assure FLEXI Deposit Bond requires no upfront fee, which differs from the standard model that requires advance payment. This enables purchasers to obtain a pre-approved deposit bond, at no upfront cost, that can be used by buyers to bid at multiple auctions or to secure a property once they have found their dream home.
When the buyer has found a property, or are successful at auction the deposit bond is updated to include the particulars of the purchase, including the vendors details, property address and agreed purchase price. This is when the home buyer pays the deposit bond fee to Deposit Assure.
“Deposit Assure has always actively looked for ways to pivot and grow demand for residential surety bonds – including being the first deposit bond provider, to release a digital bond in 2020. The new product offering, is a win:win for all involved as it provides the benefit of complete flexibility, with a ‘no win – no fee’ model,” continued Mr. Rizzo.
Borrowers are pre-approved for the FLEXI Deposit Bond of up to 10% of a client’s maximum intended purchase price. It can be used when a buyer has not yet found a property or entered into an agreement to buy a property such as buying at auction. When the borrower finds a property or has successfully bid at auction, the FLEXI Deposit Bond is updated to reflect the specific purchase details for the property. A flat fee of 1.3% of the deposit amount is then charged to the home buyer prior to releasing the updated deposit bond.
The FLEXI Deposit Bond is valid for six months, and can be reissued for an additional six months with no upfront fee. The FLEXI Deposit Bond is still assessed by Deposit Assure, and the pre-approval is based on the evidence of funds to complete, such as a loan approval or pending sale of an existing property.
“Ultimately, our goal is that the new FLEXI deposit bond helps to expedite property purchase and simplifies the auction process. Accordingly, we expect the product to have universal appeal to first home buyers, upsizers, downsizers, and investors,” Mr. Rizzo concluded.
Since 2015, Deposit Assure has provided thousands of deposit bonds to Australian property purchasers nationwide. Deposit Assure bonds are underwritten by QBE Insurance (Australia) Ltd (A+ Stable credit rating from Standard & Poors).
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