RAMS Deposit Bond
Why Use a RAMS Deposit Bond?
Not everyone keeps their cash readily available under the mattress. In fact, not all bank accounts offer ‘at-call’ access to your cash either. You may have your money locked away in a term deposit account and don’t want to withdraw it before maturity date. You may also have your cash tied up in your home’s equity and don’t want to access it until your home is sold.
Regardless of the reason you can’t access your funds, this can put you in a difficult situation if you need money to provide a deposit.
If you were to withdraw your savings from your high interest savings account in the hope that you are the successful bidder at a home Auction, you would be losing interest on that money. There’s also no guarantee you’ll win that auction.
Fortunately, there is an alternative option available. RAMS offer customers the opportunity to access a Deposit Bond that can be used to provide the real estate agent with a deposit on that new home you want. This is done without accessing your cash or savings.
The Deposit Bond serves as a guarantee to the person selling the house you want to buy that the entire amount for the deposit is available on settlement day.
Benefits of a Deposit Bond
Using a Deposit Bond offers several benefits. It does offer the property vendor some peace of mind that you have paid a deposit towards your home purchase, but in the form of a guarantee rather than cash.
However, it also allows you to keep your savings in the bank for a longer period of time. This lets you accrue more interest until those funds need to be withdrawn for settlement day. Aside from this, if you withdraw money from your term deposit account, you could incur penalty fees or reduced interest rates.
If your cash is locked away in equity, this relieves you from the pressure of redrawing funds from your mortgage to pay the deposit. If you don’t have enough money in your redraw facility, the only other way to access your equity is to refinance, which incurs additional costs.
A Deposit Bond also means you don’t need to worry about the added expense of applying for a bridging loan, which can potentially cost far more than the cost of a Deposit Bond.
For those people who purchase at an Auction sale, a deposit is required on the day of the purchase. If you don’t have a cheque book available and you are the highest bidder on Auction day, or funds aren’t accessible, a Deposit Bond is the ideal way to secure that sale.
Each of these situations mentioned above means your money remains untouched until it’s actually required by your conveyancer to proceed with settlement of your new home.
How Much Deposit Can Be Guaranteed?
A Deposit Bond can be created to cover up to 10% of the price you’re paying for your new home. The Bond written is usually secured by your existing, verified savings amount, or an equity amount, as agreed by RAMS.
In most cases, a Deposit Bond can be approved and created on the same day. This is great news if you’ve been out house-hunting and you’ve found the ideal home you want to buy. It gives you the time to get your Bond arranged and still turn up at the Auction.
Be aware that you may need to inform the real estate agent or the Auctioneer of your intention to use a Deposit Bond if you’re the successful bidder on a property. Some agents may not readily accept these, although most will. It always pays to ask and be certain before you proceed with signing a Contract of Sale.
The easiest way to verify how much you can use for a Deposit Bond for a new home purchase is to call and discuss your requirements with a RAMS representative.
Related posts:
- How to use a Deposit Bond to buy a house
- RAMS Fixed Rate
- Rams Rent Saver
- RAMS Investor Home Loan
- Interview: Nick Bateup from RAMS Discusses the New Rams Rate Shearer Home Loan
- RAMS Basic Loan
- RAMS IO Maximiser
- RAMS SE Pro Pack 2
- RAMS Fast Track Mortgage
- Rams Basic Loan
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