Rental Bond Loans and their Benefits
Amongst the excitement of finding a new rental, unfortunately, comes the need to pay the bond. With the high cost of renting, making this upfront payment isn’t always easy. Instead of letting a shortage of cash stop you from securing your dream home, many people find it useful to take out a rental bond loan.
To find out all you need to know about rental bond loans and their benefits, read our article below.
What is a rental bond?
When someone moves into a rental, their landlord will usually ask them to pay a bond. This bond can be up to the equivalent of four weeks’ rent and acts as a security deposit in case the tenant damages the property or can’t pay rent.
During the tenancy, the money will be held by Tenancy Services NZ. At the end of the tenancy agreement, the landlord will examine the property for any needed repairs. If the house has remained in the same condition, the bond will be repaid to the tenant.
What is a rental bond loan?
When someone takes out a rental bond loan, this means that they’ve borrowed money to pay their bond. Typically, this money will be borrowed from an online lender such as QuickCash. Tenants can acquire the needed cash on the condition that they will repay the lender in instalments over an agreed period, generally with interest.
What are the benefits of using a rental bond loan?
Finding the necessary funds to pay the rental bond isn’t always easy. This payment becomes especially challenging if someone is waiting for a previous bond to be returned or is simply struggling to budget in everything at once. After weeks of searching for this perfect home, it would be devastating to let this simple payment come in between someone and their dream rental. Rather than missing out of securing the property, many find it helpful to borrow the money for their bond.
In addition to the bond, many landlords ask for two weeks’ rent in advance to be paid at the start of the tenancy agreement. These upfront payments, in combination with general moving costs, can quickly become a financial burden. Rather than feeling overwhelmed with stress, people usually find that taking out a rental bond loan helps to make the move-in process as carefree as possible.
How do I apply for a rental bond loan?
Before someone can be lent the money to pay their bond, they’ll need to fill out our application form. Although every lender may have slightly different requirements, all forms usually require similar information, such as:
Rental bond amount
Firstly, the lender will need to know how much money the customer needs to borrow. Therefore, the bond amount should be stated in the application form.
How often repayments can be made
Once the amount has been established, the lender will also need to know how frequently a customer can make repayments. Typically, the customer can decide between either weekly, fortnightly, or monthly instalments. Using this information, the lender can begin to structure the loan.
Current financial status and commitments
To ensure that the loan can be repaid, the customer will need to present financial information such as their bank statement or payslip. By looking at these documents, the lender can see if the customer will have enough funds to make repayments.
Address and driver’s license
For the customer to confirm their identity, they must provide their driver’s licence and address to the lender. If the customer tries to use someone else’s details on their application form, they risk facing negative consequences such as their loan being denied.
If someone is applying for a secured rental bond loan, the customer will need to state which asset they can use as security, such as a boat or car. This security means that if the customer can’t pay back the loan, the lender can take ownership of the asset and sell it to retrieve the money owed.
At QuickCash, our secured loans mean we can lend money at a lower interest rate. For more information, read our article on secured loans vs. unsecured loans.
What should I consider before taking out a rental bond loan?
Before signing a tenancy agreement or taking out a rental bond loan, several things should be considered. Accordingly, before making your decision, people typically find it helpful to do the following.
Review your budget
People usually benefit from reviewing their budget to determine if their current finances permit them to make frequent repayments. When doing so, it’s useful to consider how the new rental will impact these expenses. For example, the rent itself might be much higher, or the new location may result in increased transport costs.
Consider other moving costs
The cost of starting a new tenancy agreement doesn’t stop at the bond. Often people will need to either hire a moving truck or buy new furniture. By considering such costs, people typically can evaluate whether or not they can realistically afford to move.
Find a house that suits your needs
When looking for rentals, people usually find it helpful to consider what property features will suit them best. Whether that’s finding a place close to work, searching for a property with a sleepout, or hunting down the perfect spare bedroom, having these factors in mind will assist the house-hunting process.
Scout out all your options
People generally benefit from utilising online tools such as TradeMe or myRent. With a range of customisable search tools, it’s more likely for someone to find a house that suits their needs. Most of the time, the search tools also allow users to set a price range, which is an ideal function to help house hunters stay within a feasible budget.
View the property before signing
Before signing a tenancy agreement, people often benefit from going to view the house. Photographs often have a gift of glamorising reality, so it’s best to check out the property in person.
Note down existing damages
With their bond on the line, tenants find it useful to note down or take photos of any existing damage before moving in. Doing so means that the landlord can’t incorrectly charge them for the repairs.
That’s pretty much all you need to know about rental bond loans. If you have any more questions or want to apply for a rental bond loan, don’t hesitate to call us on 0800 784 252 or apply online now.
Disclaimer: This article is intended to provide general information only. It does not take into account your financial needs or personal circumstances. It is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to an Authorised Financial Adviser.