Product designed for fast property purchase
Deposit Assure has introduced a product enabling prospective homebuyers to receive a pre-approved deposit bond at no upfront cost.
Developed in response to broker feedback, the FLEXI deposit bond can be used to bid at multiple auctions, until a property is secured, the deposit bond provider said.
Upon an agreement of sale, the deposit bond is updated to include the details of the purchase, including the agreed purchase price, the vendor’s details, and the property address.
At this point, the deposit bond fee is paid by the homebuyer to Deposit Assure, the company said.
The product provides a fee-free alternative to the standard model, which requires payment upfront, Deposit Assure said.
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Deposit Assure CEO Etienne Rizzo (pictured above) said the company was the first deposit bond provider to release a digital bond in 2020. It remained focused on looking for ways to pivot and grow demand for residential surety bonds.
He described the new product as a “win-win” for brokers and their clients.
“It provides the benefit of complete flexibility, with a ‘no win, no fee’ model,” Rizzo said.
The product would likely appeal to prospective buyers, including those wanting to buy at auction, he said.
“Equally, we anticipate the new model to resonate with brokers as it removes the need to go back and forth with customers to amend the deposit certificate with changing property purchase details,” he said. “It also eliminates the pain point of needing to process refunds if the borrower is unsuccessful in securing the property, and the associated clawbacks that impact brokers.”
Borrowers are pre-approved for, the FLEXI deposit bond, of up to 10% of a client’s maximum intended purchase price. A flat 1.3% fee of the deposit amount is charged to the homebuyer before the updated deposit bond is released.
It is valid for six months and can be reissued for a successive six months with no upfront fee, Deposit Assure said.
Preapproval is based on evidence of funds to complete, such as a loan approval or pending sale of an existing property.
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“Ultimately, our goal is that the new FLEXI deposit bond helps to expedite property purchase and simplifies the auction process. Accordingly, we expect the product to have universal appeal to first home buyers, upsizers, downsizers, and investors,” Rizzo said.
Deposit Assure bonds are underwritten by QBE insurance and provide a guarantee for up to 10% of the value of the purchase price of a property. They can be used by purchasers who don’t have ready access to cash, providing funds in situations where equity is tied up in an existing property.
