Deposit Bond Australia (‘DBA’) is the longest standing issuer of short and long term deposit bonds in the Australian property and finance markets. The combination of our 20 years of industry experience with underwriter QBE’s premier A+ (Stable) rating underpins nationwide acceptance of our deposit bonds by leading property groups, developers, lawyers and lenders. We offer a wide range of deposit bond products catering to a range of purchasers, including first home buyers, investors, self employed, company trust, SMSF and retiree applicants.
If you are a retiree looking to downsize or sell your existing property, a deposit bond can help you secure your next home without the need for access to a full cash deposit upfront. At DBA, we pride ourselves on our reliability and efficiency, approving and issuing residential deposit bonds within hours depending on the complexity of your situation.
This month, the team at DBA explains the benefits of deposit bonds for retirees:
Residential Deposit Bonds for Retirees
Deposit bonds are a form of financial guarantee, accepted as a legal substitute for the cash deposit required from buyers when committing to buy a residential property. The value of a deposit bond can be for any amount up to 10% of the agreed purchase price. At settlement, you must then pay 100% of the agreed contract price plus acquisition costs. The unsecured nature and cost effectiveness of deposit bonds make them one of the safest and most flexible ways for retirees to buy property in Australia. For more information about deposit bond cost and who can apply, please see our Essential Guide to Deposit Bonds.
Deposit Bond Benefits for Retirees Looking to Downsize
There are several benefits to using a deposit bond if you are a retiree looking to downsize to a smaller property. Like many baby boomers, you may be asset rich rather than having ready access to cash, or be simultaneously selling your property while purchasing another. Deposit bonds only require one upfront fee, with no ongoing fees or interest charges, and allow you to keep savings, lines of credit and other assets intact. DBA can issue residential deposit bonds on a Without Finance basis, eliminating the need for you to have a loan approval in place, and has authorisation to conduct in-house credit processing. This streamlines the application process, minimising stress and giving you a deposit guarantee within 24-48 hours within receipt of an acceptable application.
Deposit bonds are convenient for downsizing retirees in circumstances where:
- The equity available from a property sale is sufficient to fully fund the new purchase and therefore no loan is required to settle, or;
- All surplus funds are tied up in an existing property and are not readily available for upfront payment of the deposit needed to exchange contracts of sale
Eligibility Requirements for Retirees
To apply for a residential deposit bond as a retiree without finance, you must be an Australian citizen or hold permanent Australian residency status. Retiree applicants must also be able to prove their ability to pay 105% of the purchase price on the settlement date. The assessment of your financial position is made on the date of your application, and does not include future savings, earnings or asset acquisition. Retirees utilising a Trust structure to acquire property will also need to provide a copy of the Trust Deed in their application. For more information, download our Deposit Bond Application Checklist for Retirees Without Finance.
Guarantor Commitments for Retiree Applicants
If you choose to use a guarantor for your deposit bond application, there are several guarantor commitments required. All guarantors must fully provide appropriate details, sign the deposit bond application form, and also sign a separate Deed of Guarantee and Indemnity provided by DBA after assessment. Guarantees may be provided for asset purposes only. Guarantors may be co-owners of property, or Trustees if you are using a Trust structure. To learn more, download our guarantor checklist here.
What Sets DBA Apart for Retiree Deposit Bonds
As a retiree, you can rest assured that your DBA issued deposit bond is the most cost effective and flexible solution when downsizing to a smaller property. The annualised cost of residential deposit bonds in Australia ranges from 1.25% to 3.3%, which is particularly cost effective in the current market, and compares favourably with alternate deposit options. Retirees are also not required to provide any form of security, allowing you to retain full control over your assets, including savings, fixed term deposits, superannuation and share portfolios.
For more information about our range of products and services, please refer to our Information Brochures located under Downloads.
The friendly staff at Deposit Bond Australia are available during normal business hours (EST) to talk to you about your needs. If you have any questions about residential deposit bonds or the deposit bond application process, please Contact Us or use our Freecall number 1800 266 388.