When you have found the right property and need a deposit to secure the purchase, a deposit guarantee may assist buyers whose funds are currently tied up.
A deposit guarantee is a substitute for the cash deposit. The deposit guarantee is issued by a guarantor, for a fee based on its value and duration of cover. At the time of settlement the purchaser simply pays the full purchase price including the deposit amount at which point the guarantee becomes void.
Should the purchaser default under the terms of the purchase contract, the seller has the ability to claim on the deposit guarantee and the guarantor is legally obliged to pay within 2 business days. This process effectively puts all parties in the same position as if a cash deposit had been provided by the purchaser upfront. The guarantor would then seek to recover the amount from the purchaser.
It offers a safe and often more cost-effective alternative to bridging finance, and can reduce the time-pressure of selling assets to free up a deposit. If you’d like to set up a deposit guarantee for your next property purchase, please give me a call on (02) 9908 9888.
Patricia Williams is a credited representative (CRN 400458) of BLSSA Pty Ltd (Australian Credit License No. 391237).