How deposit bonds help first-home buyers compete in a hot market

• Move faster without needing the cash upfront. Deposit bonds let you secure a property even if your savings or grants aren’t ready yet. 

• Stay competitive in a hot market. You can bid at auction or make offers with confidence, just like seasoned buyers. 

• Keep your cash working for you. Your savings stay available for stamp duty, legal costs or emergencies while the bond covers the deposit. 

For many first-home buyers, saving a deposit feels like running up the down escalator. You’re disciplined, you’re committed, but every month, prices seem to rise faster than you can keep up. 

This is where a deposit bond could make all the difference. 

A deposit bond isn’t a loan. It’s a financial guarantee you can use in place of a cash deposit. And in Australia’s fast-moving property market, it can give first-home buyers a genuine edge, helping you act fast, compete with confidence, and keep your savings where they matter most. 

In this article, we’ll explain how deposit bonds work, who they suit, and how they fit with government grants and first-home buyer strategies. 

Why first-home buyers face a tougher race to buy 

Before we get into how deposit bonds work, it’s worth understanding the hurdles first-home buyers face, especially in competitive markets like Sydney, Melbourne and Brisbane. 

1. Property prices are rising faster than savings 

Even with a solid budget, many first-home buyers find the goalposts keep shifting. Saving a 10% or 20% deposit on today’s prices is tough, and it only gets harder if values jump while you’re still saving. 

2. Auctions demand speed 

In major cities, many homes are sold at auctions. If you’re the winning bidder, you’ll need to pay a 5-10% deposit on the spot. That’s a problem if your money is tied up in a term deposit, a grant that hasn’t landed yet, or simply isn’t ready to go. 

3. Investors move fast and have equity 

You might be ready to buy, but you’re up against investors who can leverage existing equity and put cash down quickly. That makes it harder to compete if you don’t have the same resources. 

You might also be interested in: Tax returns you’ll need when applying for a home loan 

What is a deposit bond and how does it work? 

A deposit bond is a financial guarantee that substitutes a cash deposit when purchasing a property. It’s issued by an insurance company and acts as a promise that you’ll pay the full deposit at settlement. 

In simple terms: instead of handing over a 10% cash deposit, you hand over the deposit bond certificate. 

The bond is only valid until settlement. That’s when your home loan kicks in, and the full purchase price (including the deposit) is paid. Deposit bonds are commonly used for: 

• Auction purchases, where a quick deposit is needed 

• Off-the-plan homes, where settlement may be months or years away 

• First-home buyers waiting on grants or savings 

And because there’s no cash changing hands until settlement, your savings remain intact for legal fees, stamp duty, moving costs, or even emergency buffers. 

How deposit bonds help first-home buyers compete 

A deposit bond lets you make an offer or bid at auction without having the cash in hand. It’s a game-changer for buyers whose deposit isn’t quite liquid yet, giving you the freedom to act fast when the right property comes up. 

It also helps you stay competitive with other buyers. While others rely on instant access to cash, your bond is ready to go with no delays waiting for transfers, final savings milestones, or paperwork. 

Instead of tying up tens of thousands in a holding deposit, your money stays working for you. Whether it's earning interest, covering stamp duty, or going towards moving costs, your savings stay flexible and productive. 

And if you're still getting your finances sorted, a deposit bond can buy you time.

Many first-home buyers use one while they wait for government grants to land or lender approvals to come through, and in a tight market, that breathing room can be the difference between securing the keys or walking away empty-handed. 

You might also be interested in: How to grow your home loan deposit 

Deposit bonds + government schemes = faster entry 

There’s a common myth that deposit bonds are only for people who don’t have savings. The reality? They’re a smart tool for buyers trying to time multiple moving parts, especially when government grants or schemes are involved. 

First Home Owner Grant (FHOG) 

• Many buyers qualify for this one-off grant but don’t receive it until settlement. 

• A deposit bond lets you secure a property today, without waiting for the grant to be processed. 

First Home Guarantee (FHG) 

• This scheme lets eligible buyers purchase with just a 5% deposit (without paying LMI). 

• A deposit bond can be used to guarantee that 5% up front, even if the funds are still coming together. 

Off-the-plan or house & land packages 

• These require a contract upfront, sometimes years before settlement. 

• Rather than locking away a $50K-$80K deposit, a bond can hold your spot while you keep saving. 

By combining a deposit bond with one of these schemes, you can move faster and reduce the risk of missing out on grants or subsidies due to delays. 
 
You might also be interested in: What is the first home buyer grant? 

Creative ways first-home buyers use deposit bonds 

1. Securing off-the-plan properties early 

A buyer in Melbourne secured a two-bedroom apartment using a deposit bond, two years before it was due to settle. The property was locked in, the price was fixed, and their savings kept growing while construction continued. 

2. Winning at auction 

In competitive suburbs, it’s common for buyers to be outbid at the last minute, often because they can’t pay the deposit fast enough. With a deposit bond, there’s no need to transfer large sums immediately. It’s ready when you are. 

3. Buying while renting 

Many first-home buyers are juggling rent while trying to save. That can slow down how quickly you can act. Deposit bonds give you the freedom to move on the right home, without waiting for a savings account to catch up. 

You might also be interested in: Buying a house without deposit 

Who can qualify for a deposit bond? 

To get a deposit bond, you’ll usually need: 

In most cases, Aussie Brokers can help assess your eligibility and coordinate the application with a reputable bond provider. 

What are the risks or limitations? 

Deposit bonds are a great tool, but they’re not a fit for every buyer or property.

Here are a few watch-outs to keep in mind: 

• Not all sellers accept deposit bonds 
  Some developers or private sellers may insist on a cash deposit. Always confirm before making an offer. 

• They come with a cost 
  Deposit bonds aren’t free. There’s typically a fee (around 1.3% of the deposit amount) based on the size and length of the bond. 

• You still need pre-approval 
  A bond is not a loan. You’ll still need to qualify for a home loan and prove that you can repay the full amount at a settlement. 

Tip: Use Aussie’s Borrowing Power Calculator to get a sense of what you could borrow before looking into a deposit bond. 

Is a deposit bond right for you? 

You might want to explore a deposit bond if: 

• You’re a first-home buyer in a hot market who’s ready to act fast 

• You’re waiting on a grant or selling another asset to fund your deposit 

• You’re buying off-the-plan or in a new development 

• You’re bidding at auction and want to avoid delays 

• You want to keep your savings flexible for other costs 

Ultimately, it’s not about whether you can use a deposit bond, it’s about whether it makes sense for your situation. That’s where an Aussie Broker can help. 

You might also be interested in: Auction bidding advice and tips

How to get started 

If you’re considering a deposit bond, here’s how to make your move with confidence: 

1. Check your borrowing power: Use Aussie’s tools to estimate how much you could borrow. 

2. Get pre-approved: Book a free^ appointment with an Aussie Broker to lock in your finance. 

3. Ask about deposit bond options: Your broker can guide you through providers and fees. 

4. Confirm vendor acceptance: Make sure the seller is open to deposit bonds before offering. 

5. Use your bond to secure the property and get ready for settlement. 

Don’t let a deposit delay cost you the home 

In today’s fast-moving market, hesitation can mean missing out. A deposit bond isn’t a shortcut, it’s a smart strategy that helps first-home buyers move faster, compete stronger, and hold onto more of their hard-earned savings. 

Book a free^ chat with an Aussie Broker today to explore whether a deposit bond is the right move for your home buying journey.