I know these have been around in Oz for a while, but I have only recently seen them advertised in NZ. Hs anyone had NZ experience? Do vendors have any issues with accepting them?
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Experience with deposit bonds?
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I believe there is a firm now selling them. That ad you hear on the radio is about Bonds. "buy this property with 1000 down".
I think the Banks accept them which means developers do. They are tough on the criteria to qualify, much like a Bank, but I guess they do that to cull out speculators.
Very popular in Oz I'm told its basically about leveraging equity for your deposit not just the purchase so it would appear they are a very useful tool for investors buying off developers.
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I was talking to my Mortgage broker this morning on this very subject.
The ability to use a deposit bond depends a lot on which Island it is to be used. They are generally accepted in the North Island, but not so much in the South. This is due to the way the deposits are held in the South Island the deposit is held in a solicitors trust account and the interest is given to the developer but in the North the interest is kept by the solicitors.
This is what I have been told I have not researched this personally.
Darryl
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Hi Darryl, The idea of developers getting interest from the Deposit amazes me.I'm based in Akld and that would never happen here and I'm stunned they get away with it down south. However I guess with all the madness and rush to buy anything down there has lead to this form of "vendor power".Doesn't seem right to me. I liked the idea of a Bond because it allows me to have the committiment without tying up the cash. I reckon you can get good value sometimes buying off the plan but I also want to retire debt (yes I know some of you say i shouldn't but reap the cash surplus) so I didn't want to borrow my deposit against my equity. I'm also concious of rising interest rates. The Bond people quoted me 6% for a 50,000 deposit which looks pretty cheap.I think its Tax deductable, its an investment purchase so I presume it is.
What to do. What did your mtge broker think about it?
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