What Are Deposit Bonds and When Are They Useful?
b'ARVE Error: Mode: lazyload not available (ARVE Pro not active?), switching to normal mode\\n\\n\\n\\n\\n\\n\\n\\n\\n{"@context":"http:\\\\/\\\\/schema.org\\\\/","@id":"https:\\\\/\\\\/onproperty.com.au\\\\/deposit-bonds-useful\\\\/#arve-youtube-qyfuirdjpic659a0b2e2896f666774254","type":"VideoObject","embedURL":"https:\\\\/\\\\/www.youtube-nocookie.com\\\\/embed\\\\/qYFuIRDJPIc?feature=oembed&iv_load_policy=3&modestbranding=1&rel=0&autohide=1&playsinline=0&autoplay=0"}\\n\\n\\n\\nWhen investing in property a deposit is paid upon the contract going unconditional. If your money is tied up elsewhere a deposit bond can be used in it\'s place.\\n\\nSometimes, when you\'re purchasing an investment property, you may not have the cash that you need for the deposit right there and then. Often, when you purchase, you\'re putting 5%, 10% of the deposit down. And for those people who have their cash tied elsewhere or may need their cash for other things, there is something called a "deposit bond" that you can use to put down as, I guess, a replacement for the deposit and you\'ll then pay it in future.\\n\\nTo understand more about this, I have Etienne on with me today from Deposit Assure. He supplies people with deposit bonds. He\'s the expert in this, so we\'re going to talk today about what exactly deposit bonds are and what sort of people and situations they\'re useful in.\\n\\nRyan:\\xa0Hey, Etienne, thanks for coming on today.\\n\\nEtienne:\\xa0Hey, Ryan. Thanks, mate, I\'m really stoked to be on here. I\'m a big supporter of your podcast, so really looking forward to this one.\\n\\nRyan:\\xa0Yeah. Well, we appreciate you coming on and getting your knowledge as well. Do you want to just quickly introduce yourself and then just answer people, what exactly is a deposit bond?\\n\\nEtienne:\\xa0Sure, okay. My name is Etienne Rizzo. I\'m one of the co-founders of Deposit Assure. We\'re a business that\'s been set up about a year and half ago now. We\'re backed by QBE Insurance, which basically means that our deposit bonds are underwritten by QBE, which is effectively the strongest underwriter in our current market in Australia. They\'re an A+ credit rated agency.\\n\\nTo answer your question, Ryan, what is a deposit bond? If your audience goes back to the last time they bought a property, they would have had to provide the real estate agent and their vendor a 10% deposit. So, up to 10% of the purchase price to basically affirm their commitment to their unconditional contract of sale. Sometimes, it can be 5% as well, but effectively, like a cash deposit, what it does is it just basically gives the vendor some assurance that the sale is going to go through.\\n\\nFor some people who either don\'t have ready access to that cash, so you could be basically a first time buyer, for example, who\'s borrowing 100% of the purchase price and don\'t have the funds you need of the 10% to secure the property, you could use a deposit bond. Or, a property investor who is buying their first investment property.\\n\\nNow that you\'ve built some equity in your home, your money is working for you and your offset account, you don\'t want to use it to secure the property. You could apply for a deposit bond in that situation as well.\\n\\nThe third, probably, scenario, Ryan, is buying and selling, which we see a lot of. So when somebody\'s selling their property and the funds from that property is being used to fund the property they\'re buying, they are waiting for the funds to arrive on settlement. So they don\'t have access today to that cash to secure the property they\'re buying.\\n\\nSo those are, I guess, the main scenarios we see with deposit bonds.\\n\\nRyan:\\xa0Yeah. And we\'ll talk a little bit more about them. Because I know people are probably familiar with the bridging finance when you buy and sell, but then, they don\'t often think about, okay, well, I actually have to pay 10% of the deposit 6 weeks or 4 weeks or however long it is before you actually settle and get that property. I need to come up with this large amount of money that not everyone has at that point in...'