A deposit can be granted in place of a cash deposit to put down on a property that will settle some time in the future. In order to be granted the deposit bond, the potential borrower will be assessed as if they are applying for the full home line required now, as opposed to when the property actually is due to settle.

The company issuing the deposit bond will ask a fee. The fee will start at around 1% of the value of the property that is to be secured by the bond. The fee can increase with a number of factors. The deposit bond can secure the property for a short period up to a year or 2.

When it is time to settle on the property and potential borrower cannot, then the company issuing the deposit bond will hand over the deposit and then seek to recoup these funds from the initial borrower.

This kind of deposit financing was very popular in the late 1990's and early 2000's with the rapid rise in the new construction of dwellings. With the cooling of the property market the companies that grant deposit bonds are becoming much stricter in their assessment criteria when looking at new borrowers.

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