A deposit bond is another term you will need to know when you are looking to apply for a loan.
This bond is something that you give to the seller of the property instead of a cash deposit.
Usually, a deposit bond is worth ten per cent of the purchase price and is offered to the vendor in advance of the final settlement of the sale.
The benefit for you is that a bond allows you to keep your cash or assets in reserve until you are closer to the final date of settlement. Therefore no money passes hands until the time of the sale.
The seller will benefit as they are guaranteed the cash deposit closer to the time by a contractual agreement.
Your lender secures the bond, and you pay a fee to the lender for their services based on the value of the bond and the time until final set