Deposit Guarantees are ideal for:

•   First time home buyers
•   Existing property owners who wish to upgrade their property
•   Investors who wish to expand their property portfolio

A Deposit Guarantee is an efficient, secure alternative that alleviates the burden and costs of accessing your investments to pay a property deposit.

For many buyers, the 5% or 10% deposit required to buy a property is often tied up in their current home or other investments. In order to raise the deposit, the buyer would need to access their bond, get expensive bridging finance or borrow the money from a financial institution. This results in high interest rates, expensive application charges and other up-front costs. By using a Deposit Advantage Guarantee, you can retain the deposit amount until transfer.

The application process is quick, easy and convenient. Guarantees are usually approved and issued within 24 hours of your application, enabling you to quickly enter into an offer and acceptance on your new property.

The following is a comparison of options on a R150 000 deposit over a 3 month period:

Deposit Guarantee:
Once-only fee = R2137.50 (inclusive of VAT)

Access Bond:
Interest payable (assuming an interest rate of 9.00%) = R3400.38

Bridging Finance:
Interest payable (assuming an interest rate of 48.55%) = R18952.78

As can be seen by this example, a Deposit Guarantee is significantly less expensive than other deposit options. However, Lombard Insurance Company Limited recommends that you seek independent advice in respect of rates and calculations.

Yes, on the condition that prior arrangement has been made with the seller.

Deposit Guarantees can be issued prior to an auction, enabling you to receive the seller's consent beforehand. The maximum amount of the Guarantee is fixed, but the property details remain open so that you can attend several auctions. Once you have a successful bid, you simply complete the seller and property details on the Guarantee Certificate.

Deposit Guarantees are legal, 100% secure and available throughout South Africa. It is at the sole discretion of the seller to accept a Deposit Guarantee as a substitute for the cash deposit..

This intelligent alternative to a cash deposit has now been adopted by a number of Estate Agents and Auctioneers as part of their Offer to Purchase documentation. If you find that we have not been incorporated into the Offer to Purchase document, we recommend that you seek the seller's consent beforehand via your real estate agent. Most sellers will welcome a Deposit Advantage Guarantee as they are often anxious to obtain a sale agreement and secure a deposit commitment from the buyer.

We also recommend that a Suggested Special Condition (found on the back of the Deposit Guarantee Certificate) is inserted into the sale agreement. This condition will amend the deposit provisions and allow the Guarantee to be used.

Lombard Insurance Company Limited will only issue a Deposit Guarantee on condition that you pay the full Guarantee amount on the settlement date of the sale agreement (normally on the date of transfer) in addition to the balance of the purchase price.

The Indemnity is the legally binding right you give to Lombard Insurance Company Limited to pursue recovery against you for any part of the Guarantee amount owing to the seller, should you default under the sale agreement.

The Deposit Guarantee expires on the earliest of when: the purchase price is paid in full; the sale agreement is terminated or lapses through non-fulfilment of suspensive conditions, and in either case the buyer is entitled to a refund of the deposit; or the Guarantee expiry date occurs. The Guarantee also expires if a claim is paid by Lombard Insurance Company Limited.

Yes.

Refunds less an administration fee of R350 will only be provided if the Guarantee has not been used and is returned to the Guarantor within 30 (thirty) days of issue.

Deposit Guarantees are legal, 100% secure and can be used throughout South Africa.

Many buyers have difficulty raising the full cash deposit as their funds may be tied up in their current home or other investments. By accepting a Deposit Guarantee, you will attract additional buyers who may otherwise not be in the property market.

A Deposit Guarantee is usually less expensive than other short term finance, and can be arranged quickly and easily.

If you are entitled to retain the deposit, you can claim the amount from Lombard Insurance Company Limited. This amount will be paid to you or the nominated stakeholder within two clear business days of Lombard Insurance Company Limited being provided with the necessary documents.

The Guarantee cannot be cancelled where it has been relied upon to sign a sale agreement.

Yes.

Flexibility of the Guarantee for auctions is one of its key features. A Deposit Guarantee is issued prior to auction so that the buyer can receive your acceptance of the Guarantee beforehand.

A number of estate agents and auctioneers have already adopted the product as part of their Offer to Purchase documentation.

If the Sale Agreement has not already made provision for the Deposit Guarantee option, we reccomend using the Suggested Special Conditions (found on the back of the Guarantee Certificate) which enables the Guarantee to be used instead of a cash deposit.

It also states that the buyer must pay the full property price, including the deposit amount, on settlement. Check with your Attorney to ensure that this Suggested Special Condition is inserted in the sale agreement.

You have the sole authority to accept or deny a request by the buyer to use a Deposit Guarantee in a property transaction.