Understanding Bond Loans

If you are considering renting a house or an apartment in Australia, your property owner will likely ask you to pay a rent bond along with your first month’s rent. This bond works as a security deposit to cover any damages that you may do to the property.

At the end of your rental contract, you are entitled to receive some or all of your rent bond back.

However, the property owner can subtract any amount needed to cover the expenses for damages done to the property while you lived there. Low-income families, who cannot afford to pay their rent bond, may be eligible for a bond loan.

What Are Bond Loans

Bond loans are no-interest loans offered by through the Australian government to low-income families. These loans can help pay for up to 90 percent of the rent bond and is typically repaid over the course of one to three years, or returned to the government at the end of your rental contract. Usually, this loan is paid directly to the property owner as soon as you move into your rental property, but some states allow tenants to be reimbursed if they have already paid their bond. People looking to rent can be pre-approved for this loan, so everything is in place once they find a place to rent.

 
Pros and Cons of These Loans

The main benefits of this type of loan are that there is no interest to pay back and that it can be paid back over a long period of time. In addition, as long as you pay the first loan back, you can be eligible to apply for bond loan whenever necessary. Of course, it is important to realize that you will have to repay this loan in addition to your regular rent, so you must budget accordingly. Also, if you do not have to pay the loan back until the conclusion of your rental contract, it is important to understand that you will be responsible to pay back any expenses the property owner withholds for damages.

Where to Get Help for a Bond Loan

Each state and territory in Australia offers their own bond loan program and has its own set of eligibility requirements. Here is a look at bond loans offered in different areas.

North South Wales. NSW makes bond loans available to anyone who is eligible for social housing, and has less than $3,000 in cash or savings. Their rent must be no more than 50 per cent of their gross income. This no-interest loan is repaid in regular payments over the course of 12 to 36 months.

Queensland. Residents of this state are eligible for a bond loan as long as they meet eligibility requirements, and have less than $2,500 in their savings and/or checking account. The total rent payment cannot be more than 60 per cent of your gross income.

South Australia. Low-income families in this state must meet all income requirements to be eligible for a rent bond. You could also be eligible for up to two weeks advanced rent payments. This loan can be repaid at the end of the rental contract.

Tasmania. Tasmania housing assistance program is run through its Housing Connect program. To qualify for a bond loan, residents must meet certain eligibility requirements and they work with you to set up a payment arrangement.

Victoria. All residents that meet the asset and income eligibility requirements in order to apply for this type of loan. Your rent cannot be more than 55 per cent of your gross income, and this loan can be repaid when you move from the property.

Western Australia. Recipients must meet income and asset eligibility requirements and their rental payments cannot be more than 60 per cent of their income. The loan must be repaid in regular payments of $25 per fortnight or more.

Australian Capital Territory. Residents in ACT must meet income eligibility requirements and have less than $10,000 in cash assets to apply. You can receive up to 90 per cent of the total costs of your rental bond and it must be repaid over the course of 20 months.

Northern Territory. Eligible residents must meet income requirements and have less than $5,000 in cash assets to apply. You rent cannot exceed $300 per week or be more than 60 per cent of your gross income.