How to Make a Deposit at an Australian Property Auction

Collage of a hand accepting keys to a house they just paid the deposit for.

The process of purchasing a home through an auction can be both mature and exhilarating for the buyer. You've finally managed to snag the home of your dreams after doing extensive planning, searching, and comparison shopping for home loans. But what are you supposed to do when the auctioneer waves you in to complete the transaction?

You will be required to sign the contract and hand over the deposit on the spot (usually at least 10% of the sale price), so it is essential to go into the auction with a plan. If your auction bid is successful, you will be required to sign the contract and hand over the deposit on the spot.  

The following is a rundown of the five different ways you can pay a deposit at an auction:

Collage of people running to a vacant house and an auctioneer.

First, some housekeeping When participating in an auction, you can give yourself a competitive advantage by resolving a few issues in advance, specifically the following ones:

  • A sum of money sufficient to cover a deposit of at least 10–20 percent.  
  • Home loan preapproval (also called conditional approval)
  • A legal representative or a conveyancer who is available to help.

Before the auction, make sure you ask the real estate agent or the vendor about the different forms of payment they will accept. The vast majority will be adaptable, but some will be rigid. Prepare yourself to fulfill any requirements they may have on the day in question. It is also a good idea to have a backup payment option in case the primary one fails (as failing to pay the deposit after winning the bidding war can have disastrous consequences). )

After ensuring that everything is in working order, it is time to place bids.

Collage of hands shaking after a successful housing deposit payment.

One of the most typical methods of making a deposit payment in the modern era is by using an online banking transfer, also referred to as an electronic funds transfer or EFT.  

After a successful auction, certain financial institutions, such as Macquarie Bank, even offer specialized mobile applications that can safely and digitally pay deposits.  

Even though making payments online can be incredibly convenient, you still need to make sure that your designated account has sufficient funds and that your daily transfer limit is high enough. If it isn't, you have the option of submitting a request to have the limit on the number of daily transfers raised.

Personal cheque

Even though it might seem archaic in this day and age, submitting a deposit in the form of a check is still a common practice at many auctions all over Australia.  

A personal cheque is essentially an electronic funds transfer printed on paper. You give it to the solicitors after filling it out with the appropriate information, tearing it off the booklet, and presenting it to them. When the other party deposits or cashes the check, the funds will be taken from your account and deposited into theirs.

If you're still young (and if so, congrats! ) and are unfamiliar with the process of writing a check, the following is a sample of what the form should look like and how it should be filled out:

A Mozo brand example cheque filled out with all the correct example info.

You can purchase a unique chequebook through your bank  

Check from the bank

A bank cheque, also known as a "counter cheque" in some circles, is an additional hardcopy option. This cheque deducts money not from your personal account but rather from the bank's direct deposit. To ensure that you have sufficient funds to cover the expenses, you make a transfer to the bank in advance, typically at the time of purchase.  

You have the option of purchasing a bank cheque either in person at the branch or online. A nominal fee, which is typically somewhere around ten dollars, will also need to be paid.

Think of a bank cheque as fancy cash; its value is established in advance, and all you need to do to complete the transaction is hand it over to the seller.  

However, there are a few requirements that must be met in order to cash a bank check, including that it be done so in the correct manner, that it can only be used for its intended purpose, and that its value cannot be altered. Because the bank prewrites the check with your maximum deposit, you won't be able to stretch your budget at the auction, which increases the likelihood that you will be outbid.  

The flip side of this coin is that the inflexibility of the prices makes bank cheques an excellent tool for avoiding rash or emotional bidding. If your bank check is for an amount that is greater than the final sale price, the additional funds will be applied to the purchase of your new residence, which is an additional perk.  

In the event that your bid is not successful, you will be required to make a new bank check for each auction that you participate in; additionally, those $10 purchase fees can add up over the course of time.

Deposit bond

A deposit bond is an insurance policy that is legally binding and that you give to the vendor. Another name for a deposit bond is a deposit guarantee. It states that you will pay the deposit when the deal is settled, rather than paying it now. This buys you some additional time to get your financial house in order before the purchase.  

You will need the assistance of the bank to write up the document, much like you would for a bank check. Because the bank does not disclose the location of the property or the name of the seller, you are free to use the same deposit bond to participate in as many auctions as necessary until you are successful.

However, not all sellers are willing to accept a deposit guarantee because many of them will require the initial deposit from the sale in order to purchase a new home for themselves. In addition to this, you will need to check with your real estate agent, as some may prefer to get their commission from the deal as soon as possible.  


Sometimes the most reliable alternative is good old-fashioned cash. Although not all sellers are willing to take cash as a deposit, some of them might. Before and during the sale, you need to make sure that you have a foolproof way to transport the notes.  

If you want to withdraw cash amounts that are greater than $10,000, you will also need to get approval from your bank. This is because this number sets off most fraud prevention alarms in banks' computer systems.

How much of a down payment am I required to make for an auction?

The customary amount for a deposit in Australia is ten percent or more of the total cost of the item being purchased. However, having a larger deposit (20% or more) can not only give you an advantage at auction, but it can also lower the cost of your home loan by saving you interest because you are not repaying as much of the principal loan balance. This can result in a lower overall cost of the loan.  

If you have a sizable deposit, you may be able to negotiate better interest rates with the lender. This is because a lower loan-to-value ratio (LVR) signals to the lender that you are a secure investment.

Do auctions have periods of time where bids can be withdrawn?

In contrast to private or off-market sales, there are no cooling-off periods associated with auctions. A cooling-off period is a period of time, which typically lasts for a few days and allows you to back out of a purchase contract. On the other hand, if you place a winning bid at an auction, you have entered into a legally binding contract to purchase the property, and therefore, a cooling-off period is not typically applicable.

At an auction, what will take place if you are unable to pay the deposit?

You may have gotten carried away in the excitement of the moment and overbid, but after an auction in which you were successful, you are unable to pay the deposit for whatever reason. If you do not pay, you are in breach of the contractual obligations that come with being a buyer; this remains the case even if the deposit is paid later than agreed upon.  

Have a conversation about your choices with your attorney or conveyancer, as you may be able to submit an application for an extension. If you do not comply, you run the risk of facing severe financial and legal repercussions.

Is the use of a credit card acceptable for the payment of a house deposit?

To put it simply, no Not only do the vast majority of sellers not accept credit cards as acceptable methods of payment for a deposit, but using a credit card to make a payment negates the entire point of making a deposit in the first place.

The amount of money that you must pay in advance constitutes the deposit. As part of a home loan, the financial institution pays the remaining balance of the purchase price (also referred to as your principal). You will make payments toward the principal of your loan, along with the accrued interest, over the course of the loan's duration. Because of this, you will never have to worry about paying interest on the deposit.

On the other hand, if you pay for your deposit with a credit card, you will accrue interest charges on the only portion of your loan that is not subject to interest charges (other than the money that is stored in an offset account). The average interest rate on a mortgage is significantly lower than the interest rate that can be charged on credit cards, which can reach upwards of 20%. This places credit card interest rates in a significantly more expensive bracket. When you're already taking on a significant commitment, this puts you in debt that you don't need to be in.  

Always seek the advice of a financial professional before making significant life choices, such as buying a home. They can advise you on the most effective ways to pay your down payment.

Utilize our home loan comparison tool to get your bidding process started off on the right foot. Have a look at the various offers of low interest rates below.

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