Hi,
My girlfriend and I are buying/planning to buy a property.
Say for example:
asking price is 500k
deposit is 10% therefore, 50k
if the loan is approved at 95% and we have 5% deposit, for instance, will the bank make up the other 5% when deposit is due? What actually happens?
Deposit question!
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: Deposit question!
Generally you can negotiate with the vendor to have a 5% deposit instead of a 10% deposit. Or even less! Some states such as QLD commonly allow deposits as small as a few thousand dollars.
If the vendor refuses anything less than a 10% deposit then the standard practise would be to obtain a deposit bond.
If the vendor refuses anything less than a 10% deposit then the standard practise would be to obtain a deposit bond.
Re: Deposit question!
Sorry if this sounds dumb. What exactly is a deposit bond?
And what's the process?
Thanks.
And what's the process?
Thanks.
- Otto Dargan
- Mortgage Specialist
- Posts: 7730
- Joined: Sat Sep 06, 2008 5:55 pm
- Location: Sydney, Australia
- Contact:
Re: Deposit question!
A deposit bond is a guarantee from an insurance company that is given to the vendor instead of a cash deposit. If you didn't complete the purchase then the insurer will pay the vendor the 10% deposit and will sue you for the money!
You can use a deposit bond if you don't actually have a 10% deposit. The fee for a bond is around 1% to 1.5% of the deposit amount, so it would cost less than $750 for your situation.
You can use a deposit bond if you don't actually have a 10% deposit. The fee for a bond is around 1% to 1.5% of the deposit amount, so it would cost less than $750 for your situation.