Deposit Bond or AffordAssist ๐๐ฒ๐ฝ๐ผ๐๐ถ๐ ๐๐ฒ๐ฟ๐๐ถ๐ณ๐ถ๐ฐ๐ฎ๐๐ฒ which is better for you?
Dear all
In explaining how AffordAssist INTEREST FREE deferred deposit solution is enabling home ownership, it may help to discuss alongside other existing industry respected deposit solutions. Thus, in this post, I provide product summaries on ๐๐ฒ๐ฝ๐ผ๐๐ถ๐ ๐๐ผ๐ป๐ฑ and the AffordAssist ๐๐ฒ๐ฝ๐ผ๐๐ถ๐ ๐๐ฒ๐ฟ๐๐ถ๐ณ๐ถ๐ฐ๐ฎ๐๐ฒ. And, how each of these products fit and form part of a residential home loan, residential property purchase, critically the settlement and after settlement.
๐๐ฒ๐ฝ๐ผ๐๐ถ๐ ๐๐ผ๐ป๐ฑ
A deposit bond is a financial tool may be used as an alternative to cash to facilitate residential and commercial real property purchases.
๐ฃ๐ฎ๐ฟ๐ ๐: ๐ฅ๐ฒ๐๐ถ๐ฑ๐ฒ๐ป๐๐ถ๐ฎ๐น ๐ต๐ผ๐บ๐ฒ ๐น๐ผ๐ฎ๐ป
1. Loan assessment: Deposit Bond does not form part of the home loan assessment. A Deposit Bond product can be offered, with and without finance qualified applicants
๐ฃ๐ฎ๐ฟ๐ ๐: ๐ฅ๐ฒ๐ฎ๐น ๐ฝ๐ฟ๐ผ๐ฝ๐ฒ๐ฟ๐๐
2. Sale type: Off the plan, new and established
3. Property type: Residential and commercial
4. Initial cash-deposit: Typically, 0.25% of the property purchase price
5. Deposit: Typically, maximum 10%
6. Seller acceptance: The seller must agree โ typically and readily accepted
7. Seller assurance: Deposit Bonds provide the seller assurance that the buyer’s deposit is insured and that they will receive it in the case where the buyer fails to settle.
๐ฃ๐ฎ๐ฟ๐ ๐: ๐ฆ๐ฒ๐๐๐น๐ฒ๐บ๐ฒ๐ป๐
8. Loan settlement: Deposit Bond does not form part of the loan settlement
9. Settlement: Deposit Bond does not form part of the property settlement
10. Payable at settlement: The buyer will pay the seller the total sum (100%) noted on the Contract of Sale for the property purchased
11. Post settlement: Deposit Bond, product does not cover post settlement
๐ฃ๐ฎ๐ฟ๐ ๐: ๐ข๐๐ต๐ฒ๐ฟ ๐ฝ๐ฟ๐ผ๐ฑ๐๐ฐ๐ ๐ถ๐ป๐ณ๐ผ
12. Term: up to 66-months
13. Valid/ end date: period includes only up to property settlement, and does not from part of the funds to settle
14. Savings: offset the cost with potential interest earned on the $80,000 in a savings account
15. Cost: varies with deposit amount and term: Example deposit amount $80,000 over 60-months term = cost approx. $13,600
๐๐ณ๐ณ๐ผ๐ฟ๐ฑ๐๐๐๐ถ๐๐ ๐๐ฒ๐ฝ๐ผ๐๐ถ๐ ๐๐ฒ๐ฟ๐๐ถ๐ณ๐ถ๐ฐ๐ฎ๐๐ฒ
AffordAssist has developed one of the most innovative combination home loan and property deposit solutions in decades. INTEREST FREE deferred deposit solution. Secure a home loan with as little as 1% cash. Taps into the equity of willing property sellers. Buy with an initial part-deposit, defer and pay the balance of the deposit typically within 60-months. Buyers get 100% Title Ownership.
๐ฃ๐ฎ๐ฟ๐ ๐: ๐ฅ๐ฒ๐๐ถ๐ฑ๐ฒ๐ป๐๐ถ๐ฎ๐น ๐ต๐ผ๐บ๐ฒ ๐น๐ผ๐ฎ๐ป
1. Loan assessment: Deposit Certificate does form part of the home loan process. The deferred amount must be considered and forms critical part of the loan assessment, approval and settlement. A Deposit Certificate is only offered as a result of due process
๐ฃ๐ฎ๐ฟ๐ ๐: ๐ฅ๐ฒ๐ฎ๐น ๐ฝ๐ฟ๐ผ๐ฝ๐ฒ๐ฟ๐๐
2. Sale type: Off the plan, new and established
3. Property type: Residential only
4. Initial cash-deposit: Not restricted. There is no minimum. Typically, in many cases it is only $1,000
5. Deposit: Not restricted. There is no minimum or maximum. The amount may be 25% or more. Typically, the balance of the loan deposit needed and may include LMI, approx. 12%
6. Seller acceptance: The seller must agree โ typically because it is a relatively new solution, can take asking a few sellers to get a willing property seller to accept
7. Seller assurance: Deposit Certificate is part of an industry leading governance process that includes a Deferred Deposit Agreement (DDA) between the buyer and sellers with relevant clauses to protect both the buyer and seller
๐ฃ๐ฎ๐ฟ๐ ๐: ๐ฆ๐ฒ๐๐๐น๐ฒ๐บ๐ฒ๐ป๐
8. Loan settlement: Deposit Certificate does form part of the loan settlement
9. Settlement: Deposit Certificate does form part of the property settlement
10. Payable at settlement: The buyer will pay the seller the property purchase price noted in the Contract of Sale LESS the Deposit Certificate amount. Thus, the seller will typically get 90% of the property sale price
11. Post settlement: Deposit Certificate product, includes a Deferred Deposit Agreement (DDA) does extend post settlement. The balance which is the Deposit Certificate amount, is typically payable over 60-months after settlement
๐ฃ๐ฎ๐ฟ๐ ๐: ๐ข๐๐ต๐ฒ๐ฟ ๐ฝ๐ฟ๐ผ๐ฑ๐๐ฐ๐ ๐ถ๐ป๐ณ๐ผ
12. Term: Not restricted. Typically, 60-month, maybe 120 or more months
13. Valid/ end date: period may extend beyond property settlement and does form part of the funds to settle
14. Savings: Interest free payments for the Deposit Certificate amount and term. Example only, $80,000 AffordAssist over 60 months โ No Interest โ (compare at 6% – $4,800 per year) saving estimated at = $24,000 over 5 years
15. Cost: Flat fee regardless of the Deposit Certificate amount and term $3,300
ย
๐๐น๐ผ๐๐ถ๐ป๐ด ๐ฐ๐ผ๐บ๐บ๐ฒ๐ป๐๐
AffordAssist โadds toโ and โfits perfectlyโ into the existing lending and property Contract of Sale processes. In our experience it is the AffordAssist framework that enables better outcomes for all stakeholders. The framework includes systems, governance process and coaching, all CRITICAL to the:
1. Loan settlement – Deposit Certificate, confirms adherence to the governance process and is critical to settle the home loan. Forms part of funds to settle; and
2. Property settlement – Deferred Deposit Agreement (DDA) to manage the balance of the deposit payments to settle the property and provide stakeholder protection.
I trust the above provide clarity to help you determine which product may be better for you.
B2B โ AffordAssist provides and manages the governance process. Are you a mortgage broker, lender, developer, an agent, in the affordable housing space or a housing minister? We welcome your team work. Join our mission, together we can help increase home ownership.
Regards
AA