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Deposit Bonds Australia: How They Work, What They Cost & the Risks (2026)

What a deposit bond is, what it costs, who issues them, when a seller can refuse one, how they work at auction, and how a bond fits when you buy your next home before selling the current one.

Andy McMaster

Reviewed by Andy McMaster, Editor

Written by Your Property Guide editorialUpdated 9 min read

How we keep this accurateSources

Key takeaways

  • A deposit bond is a guarantee you give the seller instead of a cash deposit when you exchange contracts. It promises the deposit will be paid. At settlement you pay the full price, deposit included, and the bond lapses.
  • It suits buyers whose cash is tied up: in the home they're selling, in an investment, or in an off-the-plan purchase that settles years away.
  • Deposit Power's calculator charges 1.75% of the deposit for a bond of up to 6 months, so a $100,000 deposit costs about $1,750. Longer bonds cost 3.2% a year.
  • The seller has to accept it. Under the NSW standard contract the seller approves the issuer, the amount and the expiry date, and a bond that runs out before settlement can let the seller end the contract.
  • It isn't insurance for you. If you don't settle, the issuer pays the seller and then recovers the money from you.
In this guide11 sections

What is a deposit bond?

A deposit bond is a guarantee you give the seller instead of a cash deposit when you exchange contracts. The issuer promises that the deposit will be paid. You pay the full price, deposit included, at settlement.

Moneysmart defines it the same way: used in place of a cash deposit at exchange, guaranteeing the buyer will pay the full deposit by an agreed date. It solves a timing problem. Your money exists, but it’s tied up in the home you’re selling, an investment, or savings you’ll have by the time an off-the-plan purchase settles.

How a deposit bond works

  1. You apply to an issuer for a bond for the deposit amount and the time until settlement, and sign an indemnity promising to repay the issuer if it ever has to pay out.
  2. The seller gets a bond certificate at exchange instead of cash. Under the NSW standard contract the seller approves the issuer, the amount and the expiry date.
  3. At settlement you pay the full purchase price, including the deposit, and the bond lapses.
  4. If you don’t settle, the seller claims on the bond, the issuer pays the deposit, and then recovers it from you. Deposit Bond Australia says the insurer can sue for full recovery.

What a deposit bond costs

Issuers charge a one-off fee based on the deposit and how long the bond must last. Deposit Power’s online calculator charges 1.75% of the deposit for up to 6 months (minimum $500), and 3.2% a year, by the month, beyond that (minimum $700):

Deposit6 months12 months24 months36 months
$50,000$875$1,600$3,200$4,800
$100,000$1,750$3,200$6,400$9,600
$150,000$2,625$4,800$9,600$14,400
$200,000$3,500$6,400$12,800$19,200

From the Deposit Power deposit bond fee calculator, read 6 October 2026. The calculator calls its figures indicative. Deposit Bond Australia doesn’t publish its rates, charges no application fee, and says premiums may attract GST.

An unused bond can be refunded within 30 days at Deposit Power, less an admin fee of $290 for a short-term bond or $700 for a long-term one.

Who issues deposit bonds

IssuerWhat its own site says
Deposit PowerBonds underwritten by HDI Global Specialty SE, rated AA- by S&P. Short-term bonds up to 6 months, long-term 7 to 66 months.
Deposit AssureBeing acquired by Deposit Power (announced 9 April 2026); its site now redirects to Deposit Power.
Deposit Bond AustraliaAgent and issuer for QBE Insurance (Australia). Terms of 3 to 66 months, bonds from $20,000 to $2 million, unsecured.
Home Deposit BondsTerms up to 60 months, 66 in Queensland and up to 84 on selected projects. No underwriter named.
BanksANZ says it doesn’t offer deposit bonds. CBA and NAB publish only bank guarantees for business.

Who can get one

Issuers want to see that you can pay the full price at settlement. Deposit Power, for example, asks for one of:

  • Evidence of the funds to settle, such as a loan approval, a savings statement or a gift, for a short-term bond
  • Equity in a home of at least the deposit amount for a bond up to $150,000, or twice the deposit above that
  • More equity for long-term bonds: 3 times a 10% deposit for 7 to 24 months, 4 times for 25 to 36, and 5 times for 37 to 66

Deposit Bond Australia asks that you own Australian property or have an accepted guarantor, and that you are an Australian citizen or permanent resident.

Will the seller accept one?

The seller doesn’t have to, so ask the agent before you make an offer. What the standard contracts say:

  • New South Wales: the deposit bond clause in the Law Society’s standard contract applies only if the seller accepts a bond. You hand it over at or before exchange. If settlement hasn’t happened 14 days before the bond expires, you must give a replacement at least 7 days before expiry, or the seller can end the contract.
  • Victoria: the standard contract requires the bond to expire at least 45 days after the due settlement date, according to the Legal Practitioners’ Liability Committee.
  • Western Australia: off-the-plan developers don’t have to accept deposit bonds or bank guarantees, says Consumer Protection WA.

Deposit bonds at auction

At auction the deposit is due when you sign on the day, so the seller has to have agreed to a bond before you bid. ANZ and Deposit Power both say to confirm acceptance first, and REINSW says any other way of paying the deposit needs everyone’s agreement, with contract changes drafted by the seller’s solicitor. Deposit Power offers a bond you arrange before auction day that is valid for 6 months while you look.

The risks

  • You still owe the deposit. If you don’t settle, the issuer pays the seller and recovers the money from you.
  • Expiry matters. A bond that runs out before settlement can give the seller grounds to end the contract. Match the term to the settlement date with room to spare.
  • The fee is mostly non-refundable once the bond is used.
  • You need the full price at settlement. The bond only bridges the deposit, not the purchase.

Deposit bond vs bridging loan vs bank guarantee

What it coversWhat it costsWho it’s for
Deposit bondThe deposit at exchange onlyA one-off fee, about $1,750 on $100,000 for 6 months at Deposit PowerHome buyers with funds or equity to settle
Bridging loanThe whole purchase until your current home sellsInterest on the amount the sale repays, plus loan feesBuyers who settle on the new home before the old one sells
Bank guaranteeA set amount the bank will payCBA: 2.50% a year plus an establishment fee. NAB: 1% to issue plus 2.3% a yearBusinesses: CBA’s can’t be used to buy an asset

Using a bond when you buy before you sell

The common case: you’ve found your next home, and your deposit is tied up in the one you’re selling. A bond covers the deposit at exchange. What matters is settlement, when you need the full price:

  • If your sale settles first, the proceeds pay for the new home. Negotiate a settlement date on the purchase that falls after your sale’s, and the bond may be all you need.
  • If the purchase settles first, you need finance for the full price until your sale settles. That is a bridging loan, and the bridging loan calculator shows what it would cost.

The alternatives to a bridging loan guide sets a deposit bond next to selling first, subject-to-sale offers and longer settlements.

General information, not advice

Deposit bond terms, fees and acceptance rules vary by issuer, contract and state. Read the bond’s terms and check the contract with your conveyancer or solicitor before you exchange.

Common questions

What is a deposit bond?

A guarantee used instead of a cash deposit when you exchange contracts on a property. The issuer promises the seller that the deposit will be paid. You still pay the full price, deposit included, at settlement, and the bond then lapses.

How much does a deposit bond cost?

Deposit Power's online calculator charges 1.75% of the deposit for a bond of up to 6 months (minimum $500) and 3.2% a year, by the month, for longer bonds (minimum $700). That makes a $100,000 bond about $1,750 for six months, and a $60,000 off-the-plan bond about $3,840 for two years. The calculator says its figures are indicative, and other issuers price differently.

What are the risks of a deposit bond?

You stay liable for the deposit: if you don't settle, the issuer pays the seller and recovers the money from you. A bond that expires before settlement can give the seller grounds to end the contract. The fee is mostly non-refundable, and you still need the full purchase price at settlement.

Can you use a deposit bond at auction?

Only if the seller agrees before you bid. The deposit is due when you sign on the day, so check with the agent first. REINSW says any other way of paying the deposit needs everyone's agreement, with contract changes drafted by the seller's solicitor.

How long does a deposit bond last?

Short-term bonds for established homes run up to 6 months. Long-term bonds for off-the-plan, land or homes under construction run much longer: up to 66 months at Deposit Power and Deposit Bond Australia.

Do banks offer deposit bonds?

We found none that do for home buyers. ANZ says it doesn't offer deposit bonds, and CBA and NAB publish only bank guarantees for business. Deposit bonds come from specialist issuers backed by an insurer.

Deposit bond or bridging loan: which do I need?

A deposit bond covers only the deposit at exchange. A bridging loan funds the whole purchase until your current home sells. If your sale will settle before your purchase does, a bond can be enough. If you need to settle the new home first, you need finance for the full price, which may be a bridging loan.

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