What is a rental bond?

If you’re planning to rent a property and become a tenant, or are switching rental properties, you’ll need to pay a bond before you can move into your new home. 

Rental bonds are a security deposit against the terms of your lease agreement. They serve to protect the landlord if certain incidents occur, such as property damage or failure to make necessary rental payments.

While rental bonds are not compulsory in Australia, the overwhelming majority of landlords and property managers will require them as part of a lease agreement. Generally, bonds are cash amounts to the value of two to four weeks’ rent. However, this amount can vary between rental properties with the maximum charge being four weeks’ rent. 

The bond covers the entire rental property, regardless of the number of tenants. There are no individual bonds issued. The landlord or agent cannot ask you to pay a bond before signing a tenancy agreement and cannot instruct you to pay more (or another) bond if/when rent is increased or another tenant moves in.

You can pay the rental bond to your landlord or agent, who must submit it to NSW Fair Trading or you can pay NSW Fair Trading directly through the rental bonds online service - ask your landlord or agent to email you an invitation.

You can pay the bond as a lump sum or, if the landlord agrees, in instalments once you sign the tenancy agreement.

Make sure that the rental bond figure and the transfer of funds is recorded in writing, either on the lease agreement or separately as a receipt of this transaction.

Don’t stress if you don’t have this money saved upfront, there are financial options available to help you cover the cost, including government assistance schemes and rental bond loans.

What is a rental bond loan?

Renting a property can be an expensive undertaking. On top of the costs you’ll face to move your belongings, you’ll need to come up with a rental bond and the first month’s rent. These can be confronting upfront expenses.

Rental bond loans can help cover these costs. Australian lenders typically offer unsecured personal loans for the purpose of paying rental bonds and other related expenses. It's likely you'll need less than a $10,000 loan.

Personal loan lenders in Australia generally cap the maximum borrowing limit at $50,000 - $60,000. However, the purpose of the loan, and whether it's secured or unsecured, may determine whether you can request more funds.

Loan terms typically range from one to seven years, depending on the lender’s borrowing conditions. You can apply for a personal loan with either a fixed or variable rate.

While repayment schedules can vary between lenders, you can often choose to either make weekly, fortnightly or monthly repayments. These are typically set up to align with when you’re paid.

It’s important to note that when you apply for any loan, the lender will want as much information as possible pertaining to how you intend to spend the money you’re borrowing. Be prepared to provide all required information regarding your needs, as well as pertinent personal financial details.

Who might need a rental bond loan?

If you are considering taking out an unsecured personal loan to cover your rental bond, it’s important to consider the interest rate you’ll pay, any fees that apply, flexibility surrounding repayment options, and any additional features pertaining to the loan.

Australia’s state governments also offer interest-free rental bond loans and grants for eligible applicants.

State	Type of loan offered	Eligibility requirements
New South Wales	Rentstart Bond Loan	- Australian citizen or permanent resident living in NSW  - Eligible for social housing  - Have less than $3000 in cash assets  - Able to sustain tenancy in private rental market  - Prospective rent is not more than 50% of their household’s total gross weekly income
Victoria	RentAssist Bond Loan	- Australian citizen or permanent resident living in Victoria - Meet the asset and weekly income limits  - Your share of the rent is less than 55 per cent of your gross weekly income  - You do not own or part-own any property
Queensland	Bond Loan or Bond Loan Plus                Rental Grant	- Australian citizen or permanent resident living in QLD or have a temporary protection or bridging visa  - Not currently living in the property you need bond for  - Don’t own or part-own a property  - Have less than $2,500 in cash or savings  - Have no outstanding debts with the QLD government - Prospective rent is no more than 60% of your gross weekly income - Meet income limits for your household   - Meet all the conditions for a Bond Loan  - Have not received a Rental Grant before  - Meet at least one of the eight Rental Grant eligibility conditions
South Australia	Private Rental Assistance Program	- Meet income and asset limits - Provide proof of income, identity and rent - Total rent for the property is no more than $450 per week - Share of the rent is no more than 50% of your total assessable income before tax - Don’t own or have an interest in a residential property - Don’t have a debt to Housing SA, or the debt’s less than $1,000 - Aren’t an overseas student - The property you’re applying for must be in SA
Western Australia	Bond Assistance Loan Scheme	- Australian citizen or permanent resident living in WA or New Zealand citizens holding a temporary or permanent visa - Must be aged 16 or over - Income source received in WA  - Fall under income limits  - Have less than $2,500 in liquid assets for singles without dependants or $5,000 for singles and couples with dependants
Northern Territory	Bond Assistance	- Australian citizen or permanent resident or Special Category Visa and Temporary Protection Visa holders living in NT for at least three months prior to rental application  - 18 years and older - The rent you will pay must not be more than 53% of your income  - No outstanding debt with Territory Families, Housing and Communities (TFHC)  - Have assets valued at less than $5,000
Australian Capital Territory	Bond Loans Rental	- Aged 16 and over  - Enter into a tenancy agreement in the ACT  - Earn less than the income threshold - Hold less than $10,000 in cash or savings for a single applicant, or $15,000 for joint applicants

 

What can you use a rental bond loan to pay for?

While it may seem obvious that you’ll use your rental bond loan to cover the cost of your rental bond, your lender may also allow you to use funds borrowed to pay other expenses, such as removalist fees, the first month’s rent or furniture and appliances for your new home.

How to apply for a rental bond loan?

If you’re interested in discovering how much you may be able to borrow, consider using RateCity’s Personal Loan Borrowing Power Calculator. Simply enter some details about the loan, such as the amount you want to repay, the repayment frequency and your credit score, and the calculator can help gauge your estimated borrowing capacity.

Once you’re aware of how much you want to borrow and spend, compare rental loan options using RateCity’s comparison tables. Once you’ve discovered a loan that best suits your needs, click the "Go to site" button and you’ll be redirected to your chosen lender’s website.

From there you can fill out an application form as long as you meet the eligibility criteria - generally, you’ll need to be an Australian citizen or permanent resident over the age of 18.

Be prepared to have the following documents available for verification when taking out any personal loan:

• 100 points of identification, such as your driver’s licence or passport
• Current employment details - employer’s name, contact details, recent payslips
• Personal financial details - Full list of assets, income, debts and liabilities
• Details of the item/s you intend to purchase if you don't have pre-approval

Be realistic with your budget and do your research when considering personal loans to finance purchases. Consulting a financial advisor may be helpful if you have any questions or queries.

When will I get my rental bond back?

You’ll get the bond back when you move out. The bond will be deposited into your bank account or you can choose to have a cheque sent to your new address.

The landlord or agent may make a claim for all or part of the bond if:

• You owe money for unpaid rent or water bills
• You’ve broken the lease early
• The property was damaged
• The property wasn’t cleaned properly
• Keys weren't returned and locks need replacing

If you disagree with the landlord’s claims or the amount returned you can submit your own claim amount. If left undisputed, you’ll generally receive the amount requested after 14 days.

If a claim is challenged, the state tenancy tribunal will decide how the bond will be paid out.

If your tenancy was only short-lived you might consider using the returned funds to pay any outstanding loan debts.