Who Can Use a Deposit Bond Eligibility and Requirements Explained

Deposit bonds can be used by a wide range of buyers, provided they meet the necessary eligibility requirements. Here are some common examples:

Who-Can-Use-a-Deposit-Bond-Eligibility-and-Requirements-Explained

Home Buyers Waiting for Settlement

If you’re selling your existing property to buy another, but your sale hasn’t settled yet, a deposit bond can bridge that timing gap so you can secure your next purchase without waiting for cash to clear.

First Home Buyers

Some first home buyers use deposit bonds when they’ve secured loan pre-approval but don’t have immediate access to savings or liquid funds for the deposit. This can help them secure a property while they finalise their finance arrangements.

Investors

Property investors sometimes use deposit bonds when their capital is tied up in other assets but they want to move quickly on a new purchase.

Off-the-Plan Buyers

When buying off the plan, settlement may be 12–24 months away. A deposit bond allows the buyer to secure the property today, with the deposit amount payable later at settlement once finance or equity becomes available.

Self-Employed or Retiree Buyers

For some self-employed or retired buyers, cash flow may fluctuate, or funds may be held in superannuation or long-term investments. A deposit bond can provide flexibility while awaiting access to those funds, subject to the bond issuer’s approval criteria.

General Eligibility Requirements

Each bond provider has its own assessment criteria, but generally, to qualify for a deposit bond you’ll need to:

  • Have formal or conditional home loan approval (or be in the process of securing it);
  • Demonstrate a clear capacity to complete the purchase at settlement (e.g. through savings, equity, or pending sale proceeds);
  • Provide supporting documentation, such as a copy of the contract of sale, identification, and loan details; and
  • Meet the provider’s financial and credit requirements.

The bond amount and term (how long it’s valid) will depend on the purchase price and expected settlement period. Most bonds are valid for up to six or twelve months, but extended options may be available for longer settlements, such as off-the-plan purchases.

When a Deposit Bond May Not Be Suitable

While deposit bonds can be a useful tool, they’re not always accepted or appropriate in every situation. Some sellers, developers, or lenders may prefer a cash deposit, particularly for private sales or auctions. Additionally, if you’re uncertain about your ability to complete the purchase at settlement, using a deposit bond could create financial risk. Always confirm acceptance with the vendor or agent before proceeding.

Deposit bonds can provide valuable flexibility for buyers who have the means to complete a purchase but don’t have immediate access to cash. However, they’re not a one-size-fits-all solution, and understanding the eligibility requirements, costs, and limitations is essential before proceeding. Before applying for a deposit bond, make sure to seek professional advice to confirm that it suits your situation and that you understand all conditions involved.

Learn how deposit bonds work for Aussie property buyers with BrokerCo’s general guidance.

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