Questions and answers for the buyer/purchaser

Who can apply for a Deposit Power Guarantee?
Why do purchasers like Deposit Power Guarantee?
Does the Guarantee cost less than other deposit options?
Can I use the Guarantee at auctions?
Will the vendor accept the Guarantee?
What is the Counter Indemnity?
When does the Guarantee expire or terminate?
Can I obtain a refund if I don't use the Guarantee?


Who can apply for a Deposit Power Guarantee?

Those eligible are: Existing property owners who wish to purchase property, investors who wish to expand their property portfolio and first home purchasers.
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Why do purchasers like Deposit Power Guarantees?

Like many of today's purchasers, cash for the 10%, or even 5%, deposit required to enter into a contract on another property is often tied up in the current home or other investments. This can mean either expensive bridging finance or borrowing from a finance company at high interest rates. Regardless of where the finance is obtained, interest charges, establishment fees and other up-front costs connected with the loan can be expensive and time-consuming to arrange.
Deposit Power offers an efficient, secure alternative that saves you time and money.
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Does the Guarantee cost less than other deposit options?

A six month Deposit Power Guarantee representing a $30,000 deposit would cost a once only fee of $360 (including any applicable stamp duty).

Short Term finance for $30,000 on the other hand could cost you:
  • An application fee (often 1.5% of the amount to be borrowed) = $450
  • Interest payable (assuming interest rate of 8%) for 6 weeks = $277

The total cost of bridging finance in this example is $727.

In this example a Deposit Power Guarantee can be less expensive and is usually approved and issued within 24 hours of your application, thus enabling you to quickly enter into an Offer and Acceptance on your new property.

(Above example only applies to settlement less than 6 months).
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Can I use the Guarantee at auctions?

Yes. A Guarantee can be issued prior to you attending an auction. The Guarantee amount is fixed, but not the property details, so you can attend a number of auctions. You simply complete the vendor and property details on the Guarantee Certificate when you are the successful bidder.
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Will the vendor accept the Guarantee?

The Guarantee is legal and available in all states and it is at the sole discretion of the vendor to accept it. The vendor is often anxious however to obtain a contract of sale on the property and secure a deposit commitment from the purchaser. The Guarantee can usually be organised within 24 hours, contracts are signed and the property is sold.

It is recommended that a Suggested Special Condition (found on the back of the Guarantee Certificate) is inserted or annexed to the Contract of Sale. This condition will amend the deposit provisions and allow the Guarantee to be used.
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What is the Counter Indemnity?

Vero Insurance Limited issues the Guarantee on the understanding that you will pay the vendor the Guarantee amount on the settlement date of the contract. The Counter Indemnity is the legally binding right you give to Vero Insurance Limited to pursue recovery against you for any part of the Guarantee amount we must pay to the vendor if you default under the Contract of Sale.
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When does the Guarantee expire or terminate?

The Deposit Power Guarantee ceases when the Contract of Sale is completed, terminated, rescinded or the expiry date occurs, whichever happens first. The Guarantee also terminates when a claim is paid by Vero Insurance Limited, the guarantor.
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Can I obtain a refund if I don't use the Guarantee?

Yes. If you return the unused, original Guarantee Certificate within 30 days of issue the fee will be partially refunded. An administration fee will be deducted and the balance will be mailed to you.
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