Deposit for Purchase
If you have never purchased a home before there is likely a lot of new terms being thrown around that don’t make sense to you, yet. Buying a home can be a really exciting and confusing time so taking the time to understand exactly what is going on can be incredibly beneficial long-term in ensuring you’re making the right decision.
One of those terms you may have heard is a deposit, or deposit for purchase. Sometimes deposit and down payment are used interchangeably but they aren’t actually the same thing.
Here’s what you need to know about a deposit for purchase.
What is a deposit for purchase?
A deposit for purchase is money that is put down by the purchaser with the purchase offer. It is kind of a show of good faith that the buyer is serious about the offer and really wants to buy the house.
Additionally, a deposit can show that you are financially responsible and ready to be a homeowner. It shows that you have put serious thought into buying a home – it isn’t a whim.
How much is needed for a deposit?
Unlike much of what goes on with buying a house, a deposit amount isn’t really regulated in terms of exactly how much your deposit needs to be. There is a minimum amount, which is $1,000, but aside from that you can put as much down as your want.
The only thing you need to keep in mind when offering a deposit amount is that you will need to have the cash available to pay. The deposit will only be cashed if your offer is accepted and you buy the house.
Once your offer is accepted, the deposit money will be put into a trust account and the amount you put as your deposit will be deducted from the total sale price of the home.
What if you need a little extra money to make the deposit?
You might have saved up for a deposit, but you didn’t anticipate needing such a large deposit to have a strong, competitive offer on the home you want to purchase. That’s ok – our brokerage can help with that.
If you need to borrow a little extra money to make a stronger offer, a personal loan might be the right option for you in this situation. Sometimes real estate transactions move quickly, so you need to have the money ready ahead of time.
if you need to discuss the option for a personal loan for the purchase of your home we can make an appointment to discuss getting the loan in place for when you need the funds. We work with lenders across the country who can make the process happen quickly so that you can fulfill your financial obligation for your deposit for purchase.
When do you have to present the deposit?
This will typically be determined in your purchase offer contract, but it is usually within 24 hours of the offer being accepted. The money will be delivered in guaranteed fundsand will be given to the real estate agent.
If you have questions about your deposit for purchase obligations when you make an offer, we are here to help answer them. We want to make sure you get the home of your dreams, so together we will ensure every detail is in place!
Deposit for Purchase FAQ's
The government offers a homebuyer’s plan to first time home buyers in which they can use any or all of your RRSP funds up to $25,000 to buy your first home, tax free. It does have to be paid back within a certain timeframe, but we will discuss those details if this is a route your want to go.
If your offer was accepted, and you handed in your deposit, but your mortgage financing falls through then it depends on the wording of your purchase offer whether you get the deposit back. If your offer included financing as a condition, then you have a good case for getting it back. We can discuss all of your options if you need to at any time during the process.
While the timeframe of the deposit is flexible to be outlined in the contract, you will need to follow the terms of the purchase offer. If you are late with your deposit for purchase then the seller has the right to decline your offer and choose another offer from another buyer (if there is one).
Yes – you can finance your deposit if you need to in order to make your purchase offer stronger. If you need to finance it, let’s make an appointment to talk about your options and make sure you’re making the best choices for your specific situation with how you come up with the funds for your deposit.