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Escrow on a property: Keep your home loan deposit safe

Insecure about the home-buying process and the prospect of fraud? An escrow account protects both buyer and seller by holding relevant funds in safekeeping.

Escrow

Article summary

  • Being “in escrow” means that funds and relevant documents are transferred to a third-party who holds them “in escrow” until conditions of the agreement have been met.
  • Buyers Trust, a subsidiary of the ooba Home Loans group, is a reliable service for keeping your deposit in escrow.
  • Buyers Trust opens an account in your name with one of the major banks, handles administration fees, and provides interest on the amount deposited.

Video summary

If you’re insecure about the amount of money that changes hands during transactions such as the sale of a house, or you’re concerned about fraud and other such risks; an escrow account may be exactly what you need to allay your fears. Whether you’re a buyer or a seller, using an escrow account can provide peace of mind throughout the home buying process.

What is an escrow account and how does it work?

“In escrow” refers to funds and documents which have been transferred to a third-party that holds them “in escrow” until the conditions of the agreement between buyer and seller have been met.

In the case of real estate, the escrow process starts with the signing of the offer to purchase and concludes with the release of funds to the seller once the property deal has been closed and both buyer and seller are satisfied that the terms of their agreement have been fulfilled.

The buyer benefits in that they are assured all their needs stipulated in the offer to purchase will be met before the funds are released to the seller. For example, when it comes to home inspection, the escrow account will hold back funds until the buyer is satisfied that the seller has conducted the necessary repairs and maintenance.

In this way, the escrow account acts as a kind of safebox where everything is kept secure until the deal is closed.

Buyers Trust: A reliable escrow account

Buyers Trust, a subsidiary of the ooba Home Loans group, is an example of a third-party that can provide safekeeping for your deposit. It offers a strong alternative to the transferring attorney and estate agency as a place to invest your deposit.

As well as providing a safebox, Buyers Trust also generates interest on the amount deposited.

How do I use Buyers Trust?

When you sign the offer to purchase, select Buyers Trust as the financial service with whom you wish to invest your deposit. Buyers Trust will then electronically arrange for you to be FICA’d and then to sign a simple investment mandate.

Following that, an account will be opened with one of the major banks in your name. This will serve as an escrow account, and you’ll gain the advantage of a great rate of return on interest, transparency and high-level security.

The Buyers Trust fee covers everything, including administration fees charged by the bank. Furthermore, a guarantee will be issued to the transferring attorney that you have fulfilled your contractual obligations to the property seller.

You will be able to view the account at any time, and will receive statements showing the amount of interest earned.

What happens when the home-buying process is complete?

Once the property has been transferred, and the deposit paid to the seller’s attorneys, the account will be closed, and the net interest earnings calculated and delivered to you.

Buy a home with confidence

If the benefits of an escrow account such as Buyers Trust makes you more confident about the home buying process, bear in mind that a home loan comparison service such as ooba Home Loans can also make the process easier by applying to multiple banks on your behalf, ensuring you receive the best deal on your home loan.

They also make the home-buying process easier by providing a range of tools. Start off with their bond calculator; then use the ooba Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.

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