When are Deposit Bonds Used?
Deposit Bonds are issued for usually 5 or 10% of agreed price which is the deposit required by the Vendor from a Purchaser to exchange contracts of sale when buying property.
DBA issued QBE Deposit Bonds suit the widest range of purchasers’ deposit needs due to the broad credit policies & flexible application systems which are tailored to suit Applicants’ varying circumstances.
Who Uses Deposit Bonds?
To qualify for a DBA/QBE Deposit Bond Applicant/s MUST as at date of application be able to prove their capacity to pay 100% purchase price at settlement plus costs within the terms of the Contract of Sale.
Purchasers can apply on with or without finance basis as Owner-occupiers or Investors.
Individual Applicants: PAYG, Self employed or Sole traders with an ABN
First Home Buyers utilising Government Grants or supported by Parental Guarantees.
Unsecured nature of deposit bonds means parents’ ownership of property is evaluated by DBA to ensure there is adequate equity to meet QBE policy. No charges are placed over Guarantor/s’ assets.
Purchasers Selling to Buy with Simultaneous Settlement of both current & new property.
DBA/QBE does not require the property being sold to be listed for sale or contracts exchanged in order to apply for a deposit bond. Purchasers simply need to prove ownership & sufficient equity to settle the new property.
Using a Deposit Bond to exchange takes the pressure off any need to sell prematurely or relocate prior to new property being ready for occupation. Also saves need & cost of moving twice or paying interim rental between contract exchange & settlement. Especially useful for:-
Upsizers relocating from apartment living to homes/house land packages;
Retirees who hold equity in current home rather than cash savings to pay 10% deposit for new home.
Self employed purchasers may apply with Accountant confirmation of income in some circumstances.
Corporate Applicants: Company, Trust or Superannuation entities
DBA issued QBE Deposit Bonds can be utilised by trading or investment companies, family trust or SMSF structures. The complexity of the Applicant/s’ & Guarantor/s’ financial position will determine application approval timeframes. For instance: Corporate Applicants applying for Commercial Deposit Bonds will typically take longer to assess & may require QBE approval for higher deposit bond values
Why Use a Deposit Bond?
Fastest Deposit Solution: Purchasers can access their deposit bond within 1- 48 hours from application lodgement (residential). Applications for Commercial Deposit Bonds may take 2-3 business days depending on complexity.
Electronic Application & Delivery Process means NO requirement for Applicant/s or Guarantor/s to attend face to face meetings.
Once approved DBA issues the Deposit Bond & emails a scanned copy to all relevant parties. The originally signed guarantee is mailed via Express Post as directed by the Applicant Purchasers to their legal or financial representatives.
Unsecured nature of Deposit Bonds means no charges are placed over Applicant/s’ or Guarantor/s’ current assets which means they can be kept intact earning income until needed for settlement
QBE’s A+ Rating means its Deposit Bonds are accepted nationwide by Vendors, their financial &/or legal representatives for ALL terms from 6 weeks to 66 months.
DBA – Australia’s Longest Standing Agent has been issuing Residential & Commercial Deposit Bonds since 1998 on behalf of three A+ rated public companies for terms from 6 weeks to 66 months
Premier Product – The combination of QBE policies & DBA systems provides purchasers the broadest product scope of any other Australian Residential and Commercial Deposit Bond Issuers.
Individual or Corporate Applicants buying Residential or Commercial property requiring deposits bonds from $20,000 to $2.5milion for terms from 6 weeks to 66 months.
Most Cost Effective Deposit Solution
Deposit Bond Fees are calculated by term, value & application type.
DBA/QBE Residential Deposit Bond Fees range from 1.15% deposit bond value (Terms < 6 months With Finance applications) to 3.2% pa for Without Finance applications (Terms from 3 – 66 months)
Commercial Deposit Bonds are quoted case by case in line with application complexity & bond term.
Flat Fee payable once upon approval.
No ongoing fees. No exposure to interest rate fluctuation between contract exchange & settlement
No legal fees being an unsecured guarantee.
User Friendly Application Systems
Choice of streamlined application processes available online (With formal loan approval in place only) or via electronic lodgement for all other deposit bond types:-
With Finance basis (formal loan approval for settlement is in place) for term < 6 months only;
Without Finance basis is used when loan approval is not available as at date of application, or no loan will be required to settled the property or the deposit bond term required exceeds 6 months