Deposit on a Home Purchase
Planning ahead when deciding to make a home purchase will help you ensure a stress-free move. When buying a home it is typical for the purchaser to provide a deposit once there is an accepted Agreement of Purchase and Sale in place. This is the point in the process when the buyer and seller have agreed on price, terms and conditions of the sale. In Ontario, the deposit cheque is typically 5% of the purchase price of the property and is payable by certified cheque or bank draft. This means that on a $400,000 home purchase, a $20,000 deposit will most likely be expected. The funds are held in trust by the listing brokerage and can be allocated to the down payment at the time of closing on the buyer's direction to his/her lawyer. The deposit shouldn't be confused with the down payment. Down payments are made at the time of closing, i.e. when the buyer moves into the home. A deposit is paid ahead of time, perhaps months in advance. Being aware of how much you money you will require for the deposit, and having these funds accessible to you, is one way to ensure a stress free move.