3 must knows about a house deposit
1. The Standard Form Contract for the Sale of Land refers to payment of a 10% deposit. For example, if the Sale price is $400,000.00 the deposit payable is $40,000.00.
2. This deposit can be negotiated with the seller to something less, say 5%. Using the above example, the deposit payable would be $20,000.00.
3. If the seller agrees, a Deposit Bond can be used. This means that no cash is required to secure the Purchase. The Deposit Bond works like a Bank Guarantee. The cost is usually around $500.00 to $600.00 and varies depending on the Purchase price. What this means is that you’re not having to pay $40,000.00 upfront to secure the Purchase. A Deposit Bond is ONLY issued to Purchasers who have sufficient funds (e.g. a Loan) to complete the Purchase, for example the $400,000.00.