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What are deposit guarantees?

By Adam Grocke

Deposit guarantees are an alternative to paying cash as a deposit when you purchase a property.

They are most commonly used when purchasing an apartment off the plan with final settlement for the apartment not taking place until it’s completed. Given the nature of apartment developments, they can take up to 2 years to be completed but the developer requires a 10% deposit upfront when signing the purchase contract. Instead of paying cash as a deposit, most people put their cash deposit in a bank account and then the bank provides a deposit guarantee certificate. This certificate is provided to the developer and it guarantees that the money is held in a bank account and the certificate can be substituted for cash once the apartment is completed.

The main benefit for using a deposit guarantee is the purchaser still earns interest on their cash in the bank account whilst the apartment is being built. 



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Accountants & Financial Planners - Mortgage & Finance Services
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On this entire website, information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.

No representation is given, warranty made or responsibility taken about the accuracy, timeliness or completeness of information sourced from third parties. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.

Anthony Klatt, John Grocke and Mathew Wilkshire are authorised representatives of Paragem Pty Ltd. Paragem Pty Ltd ABN 16 108 571 875, is the holder of Australian Financial Services License number 297276 and these authorised representatives trade as Johnston Grocke.

AG Finance Group is a Corporate Credit Representative (396686) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit License Number 391237).