What are Deposit Bonds?

When buying residential or commercial real estate, including vacant land (by private treaty or at auction), buyers are required to make a deposit to secure the Contract of Sale.

The amount of the deposit varies depending on which State or Territory the property is located; it can vary depending on local market conditions; and the negotiating skills of the buyer.

There are 3 ways to make the deposit: (a) cash, but that ties up working capital if you already have the ready cash; (b) bank guarantee, but that also ties up working capital, plus can take some time to organise; or (c) a Deposit Bond that can be typically issued the same or next business day.

Applicants pay an upfront fee for the Deposit Bond; we issue a special piece of paper called a Deposit Bond; your solicitor hands that onto the seller’s solicitor as the required deposit; when the property settles, 100% of the purchase price is paid to the seller; and the Deposit Bond is then null & void.

Below you’ll find two links – the first is FAQs and the second outlines a number of ‘Scenarios’ where Deposit Bonds can be used.

Target markets?

  • Insurance brokers buying real estate
  • Insurance broker clients buying real estate, albeit residential or commercial
  • Builders buying an established site to knock down and build a new house or villas or vacant land in new estate releases, plus the buyers who buy the finished property
  • Developers buying site for high-rise residential or commercial sites, plus ‘off the plan’ buyers who will be the finished apartments or industrial units etc.

The potential market is substantial. If close to your clients, insurance brokers are well positioned to be at the front of the queue.

Why with Underwriting Australia?

We’re one of two Authorised Representatives to issue Deposit Bonds on behalf of QBE Insurance. The other representative isn’t involved in the insurance industry.

We have a unique position for a number of unmatched reasons.

  • The financial strength of QBE (rated A+) with the widest acceptance by sellers and developers;
  • Residential & Commercial real estate, including vacant land;
  • Private Treaty, Bids or Auction;
  • Existing property owners (including where looking to buy another but the current property isn’t already under contract), first home buyers, super funds, trusts, partnerships, business entities, etc.;
  • For periods up to 60 months (66 months in Qld for residential);
  • From $10,000 to unlimited deposit amounts; and
  • Competitive pricing.

For FAQs, click here to read or click here to download

For Scenarios, click here to read or click here to download

For Deposit Bond Sample, click here

To obtain a quote, click here

To access the ‘online’ or ‘offline’ application forms, click here

For further assistance, email requests to team@underwriting.com.au or 1300 595 615

I welcome your direct contact if I can further assist.

Sincerely,
Kerry Henry, CEO
0498 888 333 (24/7, less sleep, Sydney time)
khenry@underwriting.com.au

(About us. One of our directors was part of the team at Royal & Sun Alliance (now Vero) that developed the Deposit Bond product, way back in 1989. I’ve been involved with various sorts of Insurance Bonds for 35+ years and also have a merchant banking background with Citibank for 10 years. That’s why we’re seen as the ‘go to guys’ for all things, Deposit Bonds. We’re one of two Authorised Representatives of QBE Insurance (Australia) limited (rated A+), which is very important, especially for ‘longer term settlements’. Plus, we’re 100% Australia owned.)