Need equity for deposit bond ?

[arruga]

Hi
My intention was to pay the 10% deposit with a deposit bond (off the plan, settlement 2015). I had verified the options with my broker, bond costs, etc...all good. Signed the contract, and now, AFTER signing the contract, the broker came with: "you need to demonstrate equity in other property equivalent to 50% of the purchase price to qualify for a bond", which I don't have.
How come the broker didn't know this and informed me BEFORE ?
Now i gotta put down the deposit in cash.
I lost confidence in the broker. Is it true that i cannot get a deposit bond because i need equity in other prop ?
I have enough cash, but prefer to invest it and go with the bond option....can't i back up the bond with my own cash invested in a term deposit of the issuer for instance ?
Thanks for advice
a.

 

[Rolf Latham]

Hi
My intention was to pay the 10% deposit with a deposit bond (off the plan, settlement 2015). I had verified the options with my broker, bond costs, etc...all good. Signed the contract, and now, AFTER signing the contract, the broker came with: "you need to demonstrate equity in other property equivalent to 50% of the purchase price to qualify for a bond", which I don't have.
How come the broker didn't know this and informed me BEFORE ?
Now i gotta put down the deposit in cash.
I lost confidence in the broker. Is it true that i cannot get a deposit bond because i need equity in other prop ?
I have enough cash, but prefer to invest it and go with the bond option....can't i back up the bond with my own cash invested in a term deposit of the issuer for instance ?
Thanks for advice
a.

dont place the deposit - then the contract becomes void

Place cash in a TD and use that as a bank guarantee

There would be a few options.



there may be other solns depending on the conditions

ta
rolf

 

[Jamie M]

Long term deposit bonds (greater than 6 months) require equity held in other resi property. You might be able to find a provider who requires less equity if that helps at all.

Like Rolf said though, there may be other options you can explore.

Cheers

Jamie

 

[Mick C]

greater than 6 months - you will require equity ( your own equity).

Else consider a term deposit/bank guarantee.

 

[Ausprop]

dont place the deposit - then the contract becomes void

careful with this assumption... certainly in WA for a standard contract, non-payment of the deposit is not an out

 

[Aaron_C]

I think there's a misunderstanding perpetuated by agents. A contract is just an exchange of promises. The seller promises to transfer the property to the purchaser, and likewise the purchaser promises to provide money to the vendor for that. By paying/not paying the deposit the contract is not void. It may be a breach, but that doesn't make it void.