Deposit Bond Australia (‘DBA’) has been instrumental in developing the current range of residential and commercial deposit bond products available in the Australian property market. DBA is the longest standing Authorised Agent of short and long term deposit bonds, having been continually approving and issuing deposit bonds for over 21 years on behalf of 3 different A-rated Australian public company Deposit Bond Underwriters since 1998.
Most recently, DBA has been underwritten by QBE Insurance (Australia) Limited (‘QBE’). QBE is the ONLY onshore Deposit Bond Underwriter with an A+ (Stable) S& P Rating regulated by APRA currently issuing residential and commercial deposit bonds to the current Australian property market.
What is a Deposit Bond? A deposit bond is a financial guarantee accepted by Vendors in lieu of cash to pay the 10% deposit required to exchange contracts of sale. At settlement, the purchaser must then pay the Vendor 100% of the purchase price.
This month, we share 8 main reasons and associated benefits of choosing a DBA issued QBE deposit bond to pay the 10% deposit needed to buy property:
- Nationwide Acceptance for ALL Deposit Bond Terms from 3- 66 months
The combined effect of QBE’s A+ rating, plus the 40+ year collective experience of QBE and DBA issuing ALL terms of residential and commercial QBE deposit bonds, ensures nationwide acceptance by vendors, lending institutions and conveyancers.
- Caters for MOST Purchasers’ Circumstances & Property Types
DBA issued QBE deposit bonds offer the widest credit parameters, and so can assist more purchasers ranging from first home buyers to retirees; owner-occupiers or Investors; PAYG or self-employed; corporate buyers using company, trust or SMSF structures; and buyers of residential or commercial properties whether existing, under construction or vacant land. To find out more about applying for a deposit bond as a retiree, first home buyer or corporate buyer, visit our Blog page.
- Deposit Bonds are UNSECURED
One of the key benefits for purchasers is that deposit bonds are unsecured. This means no mortgage is placed over existing real estate assets, nor are cash savings needed to support a deposit bond as required when using a bank guarantee. This also means saving on unnecessary legal fees for security documentation. Using a deposit bond ensures that the purchaser retains full flexibility and control of assets between exchanging and settling contracts of sale.
- FAST Service & SECURE Onshore Document Storage
Deposit Bond Australia has continually operated for 21 years and so offers its customers streamlined simple application systems. DBA will assess, approve and issue deposit bonds from within 1- 48 hours from receipt of a completed compliant application, dependent on its type and complexity.
DBA Freecall 1800 2663 88 provides direct access to and transparent reliable service from DBA’s team for both accredited referrers and direct customers.
DBA is an Australian owned business operating in association with an Australian Underwriter, meaning that all deposit bond processes are managed and customer information securely stored onshore.
- Cost-Effective Deposit Bonds
DBA issued QBE Deposit Bond fees are payable once – upon approval and prior to the issue of the guarantee. The fee is calculated by both term and value of the deposit bond, and is therefore unaffected by interest rate fluctuations. This means DBA/QBE Deposit Bonds are particularly cost effective given there are no ongoing charges and being unsecured!
The cost ranges from 1.15% of the deposit bond value for applications assessed on a With Finance basis for terms up to 6 months to approximately 3.2% pa for applications with terms from 6 to 66 months lodged Without Finance approval for settlement funds.
- Common Usage Example: Selling to Buy – Only Equity available to pay 10% Deposit
Whether buying an existing property or off the plan for purchasers who may not have access or prefer not to use cash reserves, using a DBA/QBE Deposit Bond is the most convenient means of paying the 10% deposit when selling to buy. As the deposit bond is unsecured, it means the purchaser does not need to sell or relocate prematurely and can arrange simultaneous settlement of both properties.
- Astute Use of Cash Reserves
By using a DBA issued QBE Deposit Bond, the purchasers’ money can work harder. A deposit bond defers the need for the purchaser to use their own cash up front. This negates any need to draw on savings or sell shares or other assets to commit to the new property purchase. Assets can be held, continuing to grow in value until needed for settlement.
Another benefit of keeping cash reserves intact is that purchasers retain 100% interest in revenue between exchange and settlement, rather than sharing 50/50 with the Vendor of the new property.
- No Requirement for Loan Approval
Deposit Bond Australia is authorised to conduct inhouse credit assessment equivalent to that of a full doc loan application process. Purchasers must simply complete and lodge a Without Finance application, which means no loan approval for settlement funds needs to be in place.
This type of application is applicable for all deposit bond terms longer than 6 months, and is particularly useful for retirees who will not require a loan to settle the new property. Without Finance applications are also commonly used for short term deposit bond applications where loan approvals may be delayed, which can jeopardise the purchaser’s ability to exchange contracts for sale in a timely manner.
For more advantages of using a DBA issued QBE Deposit Bond, see our Essential Guide to Deposit Bonds.
For more information about DBA 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 deposit bonds or would like a quote on buying commercial property, please Contact Us or use our Freecall number 1800 266 388.