Avoid missing out on buying a property
One of Australia’s largest deposit bond providers, Deposit Power, collapsed in March, leaving many borrowers in property purchase limbo.
There is no telling how much of the original deposit guarantee will be paid to homebuyers so many vendors (sellers) may choose not to go ahead with the purchase, particularly if they have ready buyers in the wings.
If you’re in this situation, what can you do to keep the deal alive?
Deposit Power shut its doors after its New Zealand parent company, CBL Insurance, was placed into interim liquidation by the NZ High Court in late February.
Apart from Deposit Power, CBL Insurance funded deposit bonds offered by Commonwealth Bank (CBA) and National Australia Bank (NAB). This announcement has affected thousands of buyers and vendors.
Purchases are now delayed or vendors could refuse the bond completely since there is a growing risk that liquidators won’t be able to send through all of the funds required to honour these guarantees.
However, there is still talk of a refund program for buyers so please contact email@example.com to explain your situation to CBL Insurance and ask for updates on your case.
Come up with a deposit
Obviously, the reason you chose to buy a property using a deposit bond is that you didn’t want to put up a deposit.
This may have to been to keep earning interest on your savings, to buy at auction or to avoid the delays of getting a bridging loan.
However, if you can front up at least some cash to the vendor, they may be more willing to wait until you make other financial arrangements.
It shows that you’re serious about going through with the purchase.
As it stands, vendors are hesitant to accept deposit bonds so smaller cash deposits are more readily accepted even if they’re less than 5-10% of the property value.
Anything is better than nothing.
Apply with another deposit bond provider
The other major insurer of deposit bond guarantees is QBE insurance and Westpac Banking Corporation (WBC) so you may want to consider contacting the following finance providers:
- Deposit Bond Australia (DBA)
- Aussie Bonds Australia
- ANZ deposit bonds
- Deposit Assure
- WBC deposit protect bond (Westpac)
The collapse of Deposit Power will see a large influx of customers to other deposit guarantee providers.
You should expect to see delays so factor this in and explain this to the vendor.
Please call us on 1300 889 743 if you recently applied for a home loan with us using a deposit bond and we’ll see how we can help.
For tips on what type of deposit bond to choose, how it works and how to get a cheaper bond premium, check out the deposit bond quote calculator page.
Other no deposit solutions
If you’re still looking for a property and considering using a deposit bond, consider:
- Saving your own deposit using genuine savings to qualify for much cheaper interest rates.
- Asking your parents to gift you the money for the deposit to avoid the genuine savings requirement.
- Applying for a guarantor loan so you don’t need a deposit at all and can also cover the costs of purchasing a property such as stamp duty and Lenders Mortgage Insurance (LMI).