Most purchasers think that they need to provide a bank or personal cheque for the 10% deposit to secure a property. A good alternative is what's called a deposit bond, which can be used to cover the purchaser until settlement.
These deposit bonds guarantee the vendor that should the purchaser default, that they will be paid their 10% deposit. The provider of the bond will then pursue the defaulting buyer for this amount. This means if you don't go through with the purchase, you will still lose your deposit just as if you had paid cash.
When settlement on the property occurs, the deposit bond is considered executed and the buyer must pay the vendor all the monies owing, including the deposit.
Not all vendors will accept a deposit bond so make sure when you are attending an auction that the vendor will accept this as payment. A standard bond takes about 24 hours to organise, and for example, a property that costs $500,000 requires a 10% deposit of $50,000 will cost you approximately $500 for a deposit bond.
For further information on this or for independent advice on your property purchase, please contact our team today on 02 9960 1066 or enquiries@pkproperty.com.au.