I often get asked about the term “deposit” .. one word with so many meanings
Let’s tackle it this way:
You have just signed a contract for your dream home and in that contract you negotiate the “deposit” in two parts ..
There is a deposit when the vendor signs (maybe $1k)- this one is important as it secures the contract and takes the house off the market while we get finance approved.
There is a follow up deposit when finance is approved (maybe $19k) – the size of this one is important as it shows the agent that you’re serious about your offer.
These two amounts combined make up your “deposit” of $20k.
On a contract of $500k , the associated costs of stamp duty and other legals might take the full cost of purchase out to $520k.
The loan we get might be $450k.
You have a contribution to make of $70k. Let's STEER CLEAR of calling this your deposit.
You have already paid $20k of this by way of deposit – so you have $50k to go at settlement.
Your deposit is paid the real estate agent’s trust account.
The balance of your contribution is paid to your conveyancer’s trust account in the lead up to settlement.
All much simpler if we use different words.
Still feeling perplexed..? Call or email me anytime.. It's what I'm here for..
Alan Heath