What a rental bond is
A rental bond is a security deposit under your tenancy agreement, usually around four weeks' rent, and lodged with your state's bond authority rather than kept by the landlord. When you move out, the landlord can claim from it for damage beyond normal wear and tear or for unpaid rent, and the rest comes back to you.
Start with government bond help
Every state and territory runs a rental bond scheme for people on low incomes, and most are interest free with no fees. Some also help with rent in advance. They usually cost the least, so check whether you qualify before borrowing. Our state by state guide covers who can get each one and how to apply.
Using a personal loan
A rental bond loan from a lender is an ordinary personal loan, usually unsecured, used for the bond and often removalists, cleaning and other moving costs. You apply online and repay it over a year or more, with interest and fees.
Before you sign, read the contract for the total cost of the loan, including the interest, the establishment fee and any fees for missed payments.
Pre-approval
Finding a place, signing a lease and arranging the move takes time. Many lenders will pre-approve you while you look, then pay the money when you give the go ahead, so you can lock in a property quickly. Once approved, some lenders pay the same day; others take a day or two.
Repaying the loan
Terms vary by lender, from around 12 months upwards, and many let you repay weekly, fortnightly or monthly to line up with your pay. Repayments are usually taken by direct debit, so keep enough in your account on those days.
If you're getting a bond back from your current rental, you can use it to pay the loan off early and save interest. If you can't make a repayment, contact the lender before it's due; missed payments bring fees from both the lender and your bank.
What lenders look for
- You're 18 or over and an Australian citizen, permanent resident or, with some lenders, a visa holder.
- A regular income, usually shown with recent payslips or three months of bank statements.
- Your existing debts and spending, so they can check you can afford the repayments.
- An email address, mobile number and online banking. Some lenders also ask whether you own a registered vehicle.
Pros of a personal loan for a bond
- It can cover the bond and moving costs in one go.
- It's quick to arrange online, and most are unsecured.
- Flexible repayments, and you can usually pay it off early.
- It's usually cheaper than a credit card cash advance or a payday loan.
Cons
- It costs more than a government bond loan, which is often free.
- Unsecured rates are higher than secured ones.
- Late repayments add fees and are recorded on your credit report.
Other options
- A credit card. Some bond payment services let you pay a bond by card for a fee, even if your agent doesn't take cards. Only worth it if you can clear the card before interest starts.
- Family. A parent or sibling may be able to lend you the bond, often without interest. Agree how you'll pay it back.