Deposit Bonds Help

[Property Invest]

From: Property Investor


Can anyone help me with some advice?

I have 14 days to get a deposit bond.
The property will be completed in 2 years, however there is a clause in the contract for 3 years.
So I need a Deposit Bond to cover me for 3 years.
I have 2 quotes :
1- $2,800 for 3 years.
2- $680 for 1 year which they will allow me to renew every year. In other words it would cost me around $2,000 for 3 years.

My question to everyone is :
Is option 2 ok? Or is there a risk involved?
Should I just stick with option 1?

Your advice would be greatly appreciated.

Mannie.

 

[WebBoard]

Reply: 1
From: Dave


Hi Mannie,

I'd stick to option 1. Whilst the company says it will renew it every year, that's not guaranteed. You will need to go through the entire application/loan qualification process each time you need to renew. There is no guarantee that the bond will actually be renewed. Especially if they change their criteria for bond approval, as has happened significantly this last year. If their criteria tightens further, and you still engage in active property acquisition for other properties over the 3 year settlement period, they will re-assess their risk every year and might just decide to not renew your bond. This would be dissapointing, to say the least.

On the other hand, if your income is good, and you don't plan on buying anything else over the next few years (yikes..I'd suffer withdrawal symptoms!), option 2 may suit you best.

Cheers,

Dave


{Life's short...play hard}