Hi to All,
My wife and I just signed into an off the plan unit value at $560,000 in
Brisbane CBD to be completed in 2010. we have the choice to either pay the 10% in
cash or thru a bond or bank guarantee. Obviously, we don’t want to tide 56K of our
hard earned cash in this investment.Does anyone can explain both, their cost pros and cons?
cheers and happy investing
Gio
Hi Giovanni,
I am not sure of the cost for a Deposit bond on that amount but I think they are a great idea. You just have too make sure you get more from investing the $56K for the deposit term than you would for paying the deposit bond.
Of course there is that comforting feeling of your $56K being in your bank account rather than someone elses, so the cost of the deposit bond could be well worth it for that reason alone.
Todd Burns
http://www.freepropertyhelp.com.auI am not sure if deposit bond companies will guarantee a deposit until 2010 so you might need to organise a bank guarantee. usually deposit bonds are short term (up to 6 months) and bank guarantees are for longer periods. The cheapest deposit bond company that i have found in the past has been Deposit Saver however shop around as there may be others. As for bank guarantees I honestly have no idea of the cost or process involved. Give your main financial instituation a call and see if they can help you – i know ANZ do them. Sorry if this isnt very helpful but this is not an area that I specialise in.
Anita Marshall
Advanced Finance Solutions
http://www.advancefinance.com.au
[email protected]“Of course there is that comforting feeling of your $56K being in your bank
account rather than someone elses, so the cost of the deposit bond could
be well worth it for that reason alone”.Well, to further clarify my investment strategy I was not planning to hold the
cash in a term deposit but rather once the deals in done, (securing the unit)
investing the left over in a rental property most likely outside the city. And
when the time comes in four years sell the property to reduced the amount
owned in my off the plan unit.Thanks to all who are participating!
Gio
Hi Giovanni,
I would strongly recommend using a deposit bond rather than cash.
I used one through deposit access recently.
http://www.depositaccess.com.au
[email protected] (donnie was helpful)
Its worth shopping around as they charge different fees and have different requirements. Some said I wouldnt qualify while others said I would! They do up to 5 years bonds.
Anyway thru the above 56k over 4 yrs should cost you about a $7000- once off fee. (check their online calculator). However 56k redraw at 7% would cost you more like 16000-
As you say you could use that 56k more effectively on another investment.
You will have to have equity in a existing property to get the bond, but what I like is that they dont actually take security over that property. ie. your still free to refinance it if required. They would only take a caveat over your property if you defaulted on your off the plan purchase – forcing them to pay up the bond!
I brought my of the plan for $615k with 10% bond, recently valued at 750k and still a year or 2 till completion. When finished I will get revalued and with 30% equity be able to buy no money down. (except for a $4000- bond fee).
So can work quite well (if you buy the right property!!!)
Hope this helps
GrantGrant,
Thank you for the information. This is exactly what I was looking for,
although Deposit Access was recommended before by the sales
agent, I like to follow recommendations from customers rather than
sales people. I will definitely send Donnie an email and mention
your references. Thanks for your input. I will also compare the costs
to a bank guarantee and let the forum know the results.Cheers to All,
Gio
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