How a deposit bond replaces the cash deposit at exchange, and when buyers use one.
Anthony Nocon
Founder and Mortgage Broker, Financeo
Published
26 August 2026
Last revised
11 November 2026
Reading time
4 min read
TL;DRIn a nutshell
✓What it is: a guarantee that the deposit will be paid at settlement.
✓Why use one: your cash is tied up in a term deposit, shares or your current home.
✓Cost: a one-off fee, based on the bond amount and term.
✓Acceptance: check the vendor and agent will accept a bond first.
How a deposit bond works
Instead of paying a 10% cash deposit when you exchange, you hand over a deposit bond. The full deposit is then paid at settlement.
Exchange to settlement with a bond
1
Get the bond
Approved in as little as a day.
2
Exchange contracts
The bond replaces the cash deposit.
3
Settlement
You pay the full deposit and purchase price.
4
Bond ends
No further cost.
Who uses them
Deposit bonds suit buyers upgrading before they sell, buying off the plan, or whose savings are locked away for a while.
Buy before
Upgraders
Equity is still in your current home.
Long terms
Off the plan
Settlement may be years away.
Funds locked
Investors
Cash is in term deposits or shares.
What it costs
The fee depends on the bond amount and how long until settlement. Short-term bonds are usually a small fraction of the deposit.
01
Not checking acceptance
Some vendors and auctions won't accept bonds.
02
Forgetting the deposit is still due
You need the full amount at settlement.
03
Choosing the wrong term
Match the bond to the settlement date.
Quick self-check
Tick what applies to you. It's a rough guide, not an assessment.
Tick the boxes above to see where you stand.
Frequently asked questions
No. It's a guarantee. You still need the full deposit at settlement.
This article is general information only and doesn't take your circumstances into account. Lending rules, rates and thresholds change, so check current details or speak with us before acting.
About the author
Anthony Nocon
Founder and Director of Financeo. More than a decade in lending, including commercial, business, property and private banking roles at Commonwealth Bank.
How a deposit bond replaces the cash deposit at exchange, and when buyers use one.
Anthony Nocon
Founder and Mortgage Broker, Financeo
Published
26 August 2026
Last revised
11 November 2026
Reading time
4 min read
TL;DRIn a nutshell
✓What it is: a guarantee that the deposit will be paid at settlement.
✓Why use one: your cash is tied up in a term deposit, shares or your current home.
✓Cost: a one-off fee, based on the bond amount and term.
✓Acceptance: check the vendor and agent will accept a bond first.
How a deposit bond works
Instead of paying a 10% cash deposit when you exchange, you hand over a deposit bond. The full deposit is then paid at settlement.
Exchange to settlement with a bond
1
Get the bond
Approved in as little as a day.
2
Exchange contracts
The bond replaces the cash deposit.
3
Settlement
You pay the full deposit and purchase price.
4
Bond ends
No further cost.
Who uses them
Deposit bonds suit buyers upgrading before they sell, buying off the plan, or whose savings are locked away for a while.
Buy before
Upgraders
Equity is still in your current home.
Long terms
Off the plan
Settlement may be years away.
Funds locked
Investors
Cash is in term deposits or shares.
What it costs
The fee depends on the bond amount and how long until settlement. Short-term bonds are usually a small fraction of the deposit.
01
Not checking acceptance
Some vendors and auctions won't accept bonds.
02
Forgetting the deposit is still due
You need the full amount at settlement.
03
Choosing the wrong term
Match the bond to the settlement date.
Quick self-check
Tick what applies to you. It's a rough guide, not an assessment.
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Frequently asked questions
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This article is general information only and doesn't take your circumstances into account. {{ discText }}
About the author
Anthony Nocon
Founder and Director of Financeo. More than a decade in lending, including commercial, business, property and private banking roles at Commonwealth Bank.
