Thursday, 21 June 2007

Using the deposit bond to your advantage.

A few post ago, I wrote an article about getting a deposit or a down payment on a  house. As we bank with the ANZ, we went to them to draw out a deposit bond for the new house that we just bought (Yay!!).

While we were going through the paper work with the bank manager, she told us the following information.

By using the deposit bond for your deposit, the money is not actually being transfered out of your holding until it is required.

I though about this statement and realise two things
  1. The money stays with you until the house is settles
  2. If the money is in an interest bearing account, it will continue to accumulate interest up to settlement date.
With the average Melbourne house prices at about $350K, the value of deposit bond could get significant. For a house with long settlement period, the interest accrued may be worthwhile. It gets better f you use that accrued interest as part of your house loan repayments.

However, be sure to include fees associated with the deposit bond in your maths to determine if this would work out for you.

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