What is a Deposit Guarantee – what are the benefits?

Deposit Guarantees replace the standard 10% cash deposit required by a vendor from an “off the plan” purchaser. Utilizing main stream bank lending criteria, Forza has perfected the Deposit Guarantee to provide a far more secure alternative to the standard insurance backed Deposit Bond.

Forza upon receipt of an application undertakes a full credit analysis of the purchaser, including confirmation of their equity base. If a satisfactory report on the purchaser is completed by Forza then a Deposit Guarantee will be issued with the requisite security taken over their fixed assets.
This method of Deposit Guarantee is a far more cost effective alternative to standard financing products.

Coupled with its speed and convenience, a Forza Deposit Guarantee opens the door to safe and alternative options for securing a property purchase.

A Forza Deposit Guarantee also provides comfort to Developers seeking a secure means of binding a purchaser to a long term settlement contract. In the event of default by a purchaser, Forza will payout the Deposit Guarantee to the Developer with the added comfort that the Guarantee has been issued with equity as security.

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Where are Deposit Guarantees utilized?

A Forza Deposit Guarantee is a recognized method of consideration under a pre-sale contract. This allows Developers to market to a far wider purchaser base, and particularly to those who have substantial equity but limited cash supplies. The forgoing of the standard 10% cash deposit increases potential purchasers who recognize the cost of a Forza Deposit Guarantee is minimal in comparison to other bridging and mezzanine options. A Forza Deposit Guarantee can be utilized to secure purchasers of long term settlement projects (12 months or longer) in developments such as unit residential, house and land packages, commercial and industrial and leasing.

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Who can apply for a Forza Deposit Guarantee?

The answer is quite simple, any potential purchaser, be they working, unemployed or self employed, who has equity in a fixed asset equal to 3 times the Deposit Guarantee amount. Issues such as bad credit are irrelevant if the purchaser has equity to cover the transaction. Self employed applicants will appreciate the limited supply of information required when completing an application for a Deposit Guarantee. It has remained the aim of Forza to simplify the process of obtaining a Deposit Guarantee in comparison to many Bond and Mortgage Redraw options.

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Why do purchasers like Deposit Guarantees?

More often than not the cash required for a 10% deposit is tied up in their current home or other types of investments.  Bridging finance or lending finance from a lender usually carries high interest rates and can be time consuming to organise.  Deposit Guarantees offer an alternative that is secure and efficient and can save you time and money.

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How Do They Work?

To secure a property a developer normally needs a cash deposit or something that they consider just as good. You guarantee the payment to us using your house as security and we prepare documents that guarantee payment to the builder. Everything is simple and everyone benefits!

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What Period of Time Can I Get a Deposit Guarantee to Cover?

From 12 to 48 months.

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Is There a Lot of Paperwork To Do?

Our application for is only 2 pages and requires only basic information along with your equity details. Within 48 hours we will confirm our offer to you and once accepted and paid, the deposit guarantee is forwarded to the developer or agent and the purchase goes ahead as normal. Second Mortgage Document

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Do all Builders Accept Them?

They are accepted by most major builders and developers. If your builder doesn’t know about our product, have them call us on 1300 726 964 or contact us through our website johnhambly@forzafinance.com.au .

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What Do They Cost?

The cost of each guarantee differs depending on the time period and deposit amount. You can get an estimation from your real estate consultant or call our office on 1300 726 964 for an accurate quote). For investment properties the cost of the deposit guarantee is tax deductible.

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How Do I Apply?

Go to the Section “To Apply” on the horizontal menu bar at the top of the page and follow the instructions For any other queries, please do not hesitate to call 1300 726 964 during work hours.

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How cost effective is the Forza Deposit Guarantee as a deposit option?

Generally, yes.  For example, a residential 12 month Deposit Guarantee (full doc) representing $50,000 costs a one of fee of around $1,483.00.  If you were to obtain finance you not only need to consider the interest charges but also all the fees associated.  For example,  A residential short term loan for $50,000 could cost you:

-          The application fee (usually around $600.00)

-          Interest (based on interest rate of 8%) around $4,000.00

Therefore, the total cost would be around $4,600.00

You might already have a line of credit with a financier with no upfront fees however the interest costs for a year at the Standard Home Loan variable rate of 7.34% would see you paying over $3,600.00 which is nearly 2.5% more than the cost of Forza’s Deposit Guarantee.  As illustrated in the above example, a Forza Deposit Guarantee is less expensive and only takes 24-48 hours to gain approval.

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Can Deposit Guarantee’s be used at auctions?

A Forza Deposit Guarantee certificate can be issued prior to attending an auction.  The property details don’t have to be fixed, only the amount.  If you are the successful bidder you only need to advise Forza the amount of the final purchase price, the details of the vendor and the properties details.  Forza will supply the vendor with a Forza Deposit Guarantee within 24 hours of purchase.

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Yes.

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Are Forza Deposit Guarantee’s accepted Australian wide?

Yes, Forza Deposit Guarantee’s are accepted in all states of Australia and New Zealand.

It is up to the vendor whether or not they accept a Forza Deposit Guarantee.

Forza Finance is a credible financier and therefore they are widely accepted by most vendors.

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What is the Counter Indemnity Agreement?

Forza Finance issues Deposit Guarantees on the basis that the purchaser will pay the vendor the amount of the Deposit Guarantee on the settlement date.  The Counter Indemnity Agreement is part of the application form.  It only becomes applicable if the purchaser defaults under the Contract of Sale.

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What happens if the purchaser default’s under the Contract of Sale?

The vendor nominated in the Contract of Sale will recover the money from Forza Finance and then Forza Finance will seek recovery from the purchaser via the Counter Indemnity Agreement.

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How long is the Forza Deposit Guarantee valid for?

The Forza Deposit Guarantee expires on completion, termination, expiry or rescission of the Contract of Sale – whichever happens first. 

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Is a refund available after a Forza Deposit Guarantee is issued?

Provided the original Forza Deposit Guarantee certificate is unused and returned to Forza Finance within 30 days after being issued, part of the fee will be refunded.  An administration fee will be deducted.   

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How long does it take to get a Forza Deposit Guarantee approved?

Usual turn around is 24-48 hours.

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Who benefits from Forza Deposit Guarantee’s?

-          Purchaser: by securing the opportunity to purchase a property

-          Vendor: by selling to a qualified purchaser

-          Property Marketing or Agent:  by allowing a sale to occur to a purchaser who may not have a cash deposit but are financially capable of making the purchase

-          Vendor’s solicitor:  allows an efficient and streamlined process