How a Downsizer Bond is different and why it’s perfect for buying off-the-plan
There’s a perennial problem for owner-occupiers in the property market who want to sell and move into a new place.
It’s the cash flow gap that has to be bridged in order to put down the deposit on the new home before you’ve sold your current one.
Where will you find the deposit money to exchange contracts?
Ideally, you want to move straight into your new home, and avoid having to rent for a while.
Renting comes with a fair amount of hassle. First, you have to find and be accepted for a rental property. Second, you have to find somewhere safe to deposit the sale proceeds from your old home. Third, you have to co-ordinate two house moves with all the associated administration and logistics.
For most downsizers, the mere thought of this kind of complication is a barrier to unlocking that dream lifestyle for your golden decades.
The usual solution here is to seek a bridging loan — often not just for the deposit but for the full purchase of the new dwelling too. That can be risky and expensive, assuming it’s available given your overall financial circumstances, including consideration of your age, employment status and any existing mortgage.
The main options — like bridging loans or renting — don’t work well for downsizers. That’s why we developed the Downsizer Bond.
Buying off-the-plan is a really interesting option for downsizers because you only need to finance the deposit in the short-term. Then you have the benefit of extended time before settlement to co-ordinate the sale of your house and manage your downsizing project.
And now that Downsizer has brought our cashless Downsizer Bond to market, you may not have to pay a cent until settlement!
What is a Downsizer Bond? How does it work?
A Downsizer Bond is a deposit guarantee that is provided on your behalf to the seller of the property. It secures the exchange of contracts and allows you to delay cash payment until settlement.
For new build properties, the seller will be the property developer.
A Downsizer Bond is different from other deposit guarantees in that it is paid for by the developer, there is a streamlined online eligibility check, and it offers better downside protection.
As the Downsizer Bond is paid for by the property developer, there is no interest paid by you at all. You only pay a one-time transaction fee of $1,500+GST.
Our eligibility assessment uses the equity in the home you currently own. It’s very simple and you can start everything online. You won’t need to go through a full-blown loan application process.
Simply confirm your address and the size of your current mortgage, and Downsizer will do the rest. If your equity is enough to back the bond, you’ll be approved in-principle.
Check your eligibility instantly and find out what you can afford to buy.
In the event that you decide not to proceed with the purchase, you won’t automatically be liable for the full deposit amount. We limit your liability to 20% of any loss actually crystallised by the developer, for example, if the market has fallen and the property is sold for a lower price. Under a normal deposit guarantee, you can be liable for a lot more.
We only work with developers who have an iCIRT star-rating, or are on the pathway to a rating, and you can quickly search and see what’s available in our online Marketplace. There are new homes being added to the platform every week and you can sign up for free email alerts.
You can find out more about a Downsizer Bond by reading the FAQs on our website.
Curious to know whether a Downsizer Bond is right for you? You can get in touch with us using the contact form on our website. We welcome your questions and messages.
