Deposit Bond

A deposit bond is commonly used by buyers who have their funds tied up in another property or investment and cannot provide a cash deposit immediately. Instead of paying the usual 5 to 10 per cent deposit, the buyer provides a bond issued by an insurance or guarantee provider. The bond promises that the deposit will be paid in full at settlement, giving the seller similar protection to a cash deposit. While deposit bonds are safe when the buyer is qualified, some sellers feel unsure about accepting them which is why strong agent guidance is important. Agents must review the bond details, confirm the buyer’s financial position and explain the risks and benefits clearly to the seller. Deposit bonds are common in off the plan purchases, bridging loan situations and property chains where timing overlaps. When handled well, they allow committed buyers to proceed smoothly, making the sale more flexible without compromising security.