How deposit bonds work
A deposit bond is an insurer's guarantee that you hand the vendor at exchange instead of a cash deposit; the vendor is paid the deposit by the insurer if you fail to settle, and you pay the full price at settlement. It costs a one-off fee, it needs the vendor's agreement, and it does not reduce your exposure if the purchase falls over. This guide covers who uses them, what the issuers publish on fees and eligibility, why a vendor can say no, and the risks.
- A guarantee in place of cash at exchange; the full price is paid at settlement; it is not a loan (Deposit Power, Moneysmart)
- One-off fee by deposit size and term: 1.3% of the deposit under six months at Easy Street; calculators at Deposit Power and Home Loan Experts; terms up to 48 months
- Up to 10% of the price (Deposit Power); eligibility assessed on your capacity to settle, usually a pre-approval and evidence of funds
- The vendor does not have to accept one (Lawyers Conveyancing); agree it before you offer or bid, and check the contract
- The bond covers the vendor, not you: default and the insurer pays the vendor then recovers from you (Lawyers Conveyancing)
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate. Comparison rates are calculated on a secured loan of $150,000 over 25 years for home loans, a loan of $30,000 over 5 years for car and personal loans, and $50,000 over 5 years for equipment finance, unless the lender states another basis.
What is a deposit bond?
Moneysmart's glossary: a deposit bond can be used in place of a deposit when a buyer exchanges contracts on a property, and it guarantees that the buyer will pay the full deposit by an agreed date. Deposit Power, the largest issuer, publishes that it is a financial guarantee in the form of a digital certificate that acts as a substitute for a cash deposit, that it is not a loan, and that it does not tie up your cash or assets. Lawyers Conveyancing describes the legal mechanics: the bond is an insurance policy under which the insurer will pay the 10% deposit to the vendor in any of the circumstances where the deposit would otherwise be forfeited. At settlement you pay the full 100% of the price from your loan and your own funds, and the bond lapses.
Who uses one, and why?
Easy Street lists the buyers: first home buyers, investors, downsizers and upsizers, off-the-plan purchasers, and people using bridging loans. What they share is money that exists but is not cash on exchange day. A downsizer's deposit is in the house they are selling. A first home buyer's is in super under the First Home Super Saver Scheme until the ATO releases it, or in a term deposit that has not matured. A buyer with a guarantor may be borrowing the whole price and have no 10% to hand over. Deposit Power publishes the common case: you have found the property but lack the full cash deposit or do not wish to tie up funds while selling your current property.
What do the issuers and guides publish?
Checked against each source's published page on 20 September 2026; "Not published" means the page does not state it. Fees change without notice, so get a quote before relying on them.
| Source | Fee as published | Amount and term | Eligibility and speed | Other published terms |
|---|---|---|---|---|
| Easy Street | One-off 1.3% of the deposit amount when settling in under six months; other terms quoted online | Not published | Not published | For first home buyers, investors, downsizers, upsizers, off-the-plan and bridging |
| Deposit Power (incorporating Deposit Assure) | One-off fee via its published calculator; indicative until confirmed on application | Up to 10% of the purchase price | Eligibility assessment of your capacity to settle; approval almost immediately, digital bond within minutes | Not a loan; does not tie up cash or assets; its calculator compares the fee with the interest on a $120,000 cash deposit |
| Deposit Bond Australia (QBE bonds) | A one-time fee payable on approval, before the bond is issued | Residential and commercial purchases | Checklists by purchaser type | Issues QBE deposit bonds |
| Home Loan Experts (broker) | Quote calculator comparing premiums from several insurers | By property value, guarantee percentage and term, normally 0 to 48 months | Short-term bonds under six months are straightforward if finance is progressing; larger or longer bonds need a broker | Bond term set from the contract's final completion date |
| Lawyers Conveyancing (conveyancer) | — | — | — | Vendor acceptance is discretionary; the bond does not cover the purchaser; strategies for vendors relying on a bond |
What it costs, worked
On an $800,000 purchase with a 10% deposit and a 90-day settlement, Easy Street's published 1.3% gives a fee of $1,040. Deposit Power's calculator makes the comparison the issuers like: $80,000 left in a savings account for 90 days at its assumed 5.5% earns about $1,085, so the bond roughly pays for itself against cash you would otherwise withdraw early, and it clearly wins against selling investments or breaking a term deposit. For an off-the-plan purchase settling in 18 months, the fee is quoted individually and is higher, and the issuers assess it more like a loan. The upfront buying costs calculator shows where the deposit sits in the full settlement figure.
Will the vendor accept it?
Not necessarily. Lawyers Conveyancing publishes that a vendor does not have to accept a deposit bond, and sets out why some prefer cash: a cash deposit sits in the agent's trust account and can be released or applied at settlement, while a bond is a promise to pay if things go wrong. Practically, ask the agent before you make an offer and have the bond agreed in the contract; for an auction, NSW's guide publishes that the deposit is paid on the spot, usually 10%, so the vendor's acceptance has to be in place before you register to bid. Some auction contracts specify a cash or bank cheque deposit, and a vendor under pressure may accept a bond only with a shorter settlement.
The risks
The bond protects the vendor, not you. Lawyers Conveyancing publishes that if the purchaser defaults the insurer pays the vendor and then pursues the purchaser for the amount, so your exposure is the full 10% plus the fee, exactly as if you had paid cash. The bond does not make your finance more certain either: if the valuation comes in low or the loan is declined, the bond does not settle the property. Deposit Power's eligibility assessment exists to check that you can complete, which is why a pre-approval and evidence of the settlement funds are what issuers want. Use a bond to solve a timing problem, not a funding problem, and get the pre-approval first. A broker can arrange the bond alongside the loan and time both to the contract, and Your Finance Guide refers you to one licensed broker partner for that; we do not lend or issue bonds ourselves.
Deposit and exchange guides
Where the money comes from and when it is due.
Deposit bond FAQs
Are deposit bonds risky?
How much is a deposit bond fee?
Why would a vendor not accept a deposit bond?
What does it mean to deposit a bond?
Who uses deposit bonds?
How fast can I get one, and what do I need?
Can I use a deposit bond at auction?
Exchange now, pay at settlement
Tell us the property, the settlement date and where your deposit is, and we refer you to one licensed broker partner who arranges the bond with the loan and checks the vendor will take it. Free for borrowers, no obligation.