Deposit guarantees

A deposit guarantee or a deposit bond, is a substitute for a cash deposit on a property purchase. The issuer of the bond simply guarantees the seller that the money will be paid when contractually required. The guarantee costs the purchaser a fee, whilst the seller is guaranteed payment. Buyers use deposit bonds when their cash resources are tied up temporarily. The actual deposit is then only paid at settlement. A deposit guarantee is a fast and cost effective alternate to short term finance. It can be used for all or part of the required deposit, up to a maximum 10% of the purchase price.