Deposit Bond

Hi,

I am looking to buy property OTP with 10% deposit. My funds are sitting in my stock portfolio, and somehow, I don't think that it is not really the good time to liquidate them.

Beside that I don't have any (property) equity or savings, Sunset Clause mention 18 months in the contract.
Now how can I avail Deposit Bond without putting anything as security. Am I eligible? If yes, any references?

What are the costs involved?

Alternately, I can borrow money as Personal Loan - charging me 9%. Would you advise borrowing money to put it as Deposit Bond? Do I earn interest on Deposit Bond? How much? Is the differential interest expense can be used for tax depreciation?

Thanks in advance,

cheers
v.
 
I believe a deposit bond will cost you about 2.5%.

You also need to check if they will accept a deposit bond rather than an actual deposit.
 
When assessing your eligibility for the bond, they'll essentially look at it on the basis that you'll be able to settle the transaction. A pre-approval may help.

A lender wants to see that you've got enough funds/savings to cover the difference between purchase price + costs and the loan. Your share portfolio should be fine to demonstrate this.
 
A lender wants to see that you've got enough funds/savings to cover the difference between purchase price + costs and the loan. Your share portfolio should be fine to demonstrate this.

Hmmm, I'm actually in a similar position, except that I've got my PPOR. Paid about 20K off the home loan. Equity from increased value of pty approx 20K. Total equity approx 40K. Significant share portfolio (also reluctant to sell at this time).

Wanting to invest in first IP. This week, I approached my current bank for an equity loan to use as deposit for IP and obtain loan with another bank. Application was refused. Not happy :mad:

The broker I met with (not associated with my current bank) had indicated that I would be able to take out an equity loan of $40k no problems, but my current bank flatly refused, despite my significant portfolio. All to do with affordability.

Seems like a share portfolio holds little weight as a factor that banks take into account when deciding whether to lend you money.....
 
For a long term bond you simply have to demonstrate that you have sufficient equity in existing residential property. The amount is generally 50% of the property you're looking to purchase (ie. for a $400k property you'd have to have $200k in equity).

You can use the calculators on deposit power/deposit access sites to get an idea of the costs.

From experience, deposit access are more flexible in their policies than deposit power.

Cheers

Jamie
 
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