A deposit bond is like a financial guarantee to the vendor for the 10% cash deposit normally paid when exchanging contracts to purchase a property. In instances where a purchaser does not have the full 10% deposit required to exchange contracts, they provide a deposit bond as a cash substitute, no money actually changes hands until settlement.

Below are some of the reasons you may use a deposit bond rather than putting down a cash deposit to secure your new home.

  • Your cash savings deposit is less than 10% of the purchase price
  • Your using funds from the sale of an existing property which has not settled
  • You want to keep your savings in an investment account earning interest while you wait for settlement to occur.
  • Your using funds from a fixed term deposit account which has not matured yet

Always check with the vendor, real estate agent or developer about using a deposit bond prior to signing any contracts or paying for the deposit bond. Some vendors may refuse to accept a deposit bond in circumstances where they require access to the deposit to secure a new home for themselves. A deposit bond, being no more than a guarantee, can’t be used by the vendor for this purpose.
Real estate agents are often paid their sales commission from the deposit, so they may refuse to accept deposit bonds if they are not prepared to wait until settlement for their payment.


The Cost – a deposit bond will generally cost you around 1.3% of the deposit amount. If you are purchasing a property for $600,000 and are required to pay a 10% deposit, being $60,000, your deposit bond will cost you $780.

Important –   In the event of not settling on an exchanged Contract of Sale, you cannot simply walk away from the deposit bond. You will be required to pay the 10% deposit.


Your Assured lending Mortgage Broker can give you more information about deposit bonds and will organise your deposit bond for you.



Contact an Assured Lending Mortgage Broker for more information today




Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.