Do You Really Need a 10% Cash Deposit for a New Build?
Many buyers are surprised to learn that when purchasing a new build or off-the-plan property, you don’t always need to hand over tens of thousands of dollars in cash upfront.
In some cases, a Deposit Bond can be used instead of paying the traditional 10% deposit required by the developer.
So How Does it Work?
A Deposit Bond acts as a financial guarantee to the seller, confirming that the deposit will be paid at settlement. Instead of transferring cash upfront, the bond is provided in its place, giving you time and flexibility before settlement occurs.
Why Buyers Consider a Deposit Bond
For many purchasers, this strategy can help ease short-term cash flow pressure and keep funds working for them elsewhere.
Some Potential Benefits Include:
- Keeping your savings in your offset or savings account for longer
- Maintaining flexibility with your available cash
- Potentially continuing to earn interest on your funds
- Providing a solution for buyers waiting on settlement, equity release, or other funds to become available
A Simple Example
For a property purchase of $800,000, a standard 10% deposit would typically require $80,000 upfront.
With a Deposit Bond, you may be able to secure the property without immediately paying that cash deposit, depending on eligibility and lender or provider requirements.
Important Things To Know
Deposit Bonds are not suitable for every situation. Acceptance depends on the developer, contract terms, and the specific provider or lender involved.
It’s important to confirm upfront whether the seller will accept a Deposit Bond before signing any contract, as not all developers allow them.
Is It Right For You?
Deposit Bonds can be a useful tool for buyers looking to manage cash flow strategically while securing a property early — particularly for new builds and off-the-plan purchases.
If you’re considering a purchase and want to understand whether a Deposit Bond or other structuring options might suit your situation, it’s worth speaking with a mortgage broker before committing.