A Deposit Bond is a guarantee or bond that is used in substitute of a cash deposit. It can be used for all or part of the required deposit, up to a maximum of 10% of the purchase price.  It is a guarantee to the Vendor (the person selling) provided by an Insurer and can be organised through a banking institution.

At settlement you as the Purchaser are required to pay the full purchase price including the deposit amount. The use of a Deposit Bond does not remove your obligation to pay the full deposit upon settlement.

If you default under the Contract of Sale and are required to pay the deposit, then the Vendor can claim the guaranteed amount from the Insurer. The Insurer will then pursue you (the Purchaser) to recover the money paid on your behalf.