Commonwealth Bank’s $10k deposit offer helps homebuilders secure financing

Jarrod Brown
By Jarrod Brown
4 Min Read

Australia’s biggest bank is helping property developers lock down construction financing by allowing homeowners a cheaper entry price into the property market. 

Partnering with property tech platform CopositCommonwealth Bank (CBA) is giving prospective homebuyers the chance to skip years of saving and secure an off-the-plan home build with as little as a $10,000 deposit. 

Traditionally, property developers would instead require a 10 per cent upfront deposit for off-the-plan contracts, forcing buyers to usually fork out close to $94,000 for the average $940,000 Aussie home. 

CBA Group Executive Business Banking Mike Vacy-Lyle said he hoped the initiative would make “a real difference” in the housing crisis by allowing buyers to secure the purchase while continuing to save for the initial property as it continues construction.

“Housing affordability and undersupply are some of the most pressing issues nationally, requiring a multifaceted approach involving innovative, sustainable solutions and cooperation between all industry stakeholders,” he said in a statement. 

However, the real boon for the industry is for the home builders themselves. With CBA expecting the lower entry price to create a boom in housing supply, property developers will be able to include the spike in deposits in their spreadsheets when seeking finance for their projects. 

According to CBA, the deal would deliver “greater certainty” for home builders when navigating their pre-sale hurdles.  

“This is an important step in facilitating better lending outcomes for new residential developments, to help fast-track new supply to the market,” added Mr Vacy-Lyle.

Usually, property developers are forced to achieve a certain level of off-the-plan sales (between 30 to 50 per cent) before a lender would provide the finances needed for construction to begin.

The offer comes after  ASIC revealed “volatile market conditions”, including labour shortages, material costs and excessive red tape, had caused over 2,300 tradesmen’s companies to declare bankruptcy from 2023-2024.

How does it work?

However, Coposit isn’t allowing just anyone to hand over their $10,000 to get a property.

Prior to settlement, the buyer must pay the balance of the required deposit in weekly, interest-free payments during the construction phase until they hit the required 10 per cent of the purchase price. They’ll then finalise the settlement through traditional financing channels upon completion.

To be qualified for this program, applicants will also be assessed on their finances to see whether they could afford the 10 per cent deposit when it’s needed.

If a buyer isn’t projected to cover the cost of the full deposit, then it’s up to the developer to decide whether to put the applicant on a delayed payment plan or put the property back on the market.

Coposit’s CEO and co-founder, Chris Ferris, said the partnership with CBA is committed to “changing the pathway to owning property”.

“…We believe in breaking the barriers to home ownership for all Australians and we are thrilled to see that Australia’s largest bank agrees,” he said.

“Coposit’s agreement with CBA will help more developers secure the pre-sales needed to get their projects underway and start their builds sooner, which is critical in helping the industry increase supply.”

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Jarrod Brown combines his background in journalism, copywriting and digital marketing with a lifelong passion for storytelling. He has a strong passion for new and emerging consumer technology within the building sector. He lives on the Sunshine Coast - usually found glued to the deck of a surfboard.