The deposit is the money that you put down to secure the property that you are purchasing. In other words, you are proving that you are serious about buying the property. There is no set amount on how much the deposit amount is. However, most often the deposit is five per cent of the purchase price. When you are writing an offer to purchase with your real estate agent, they will require a deposit amount. That amount depends on the purchase price and how quickly you will be closing on the sale. The deposit is applied against the purchase price of the property when the sale closes. The deposit will become part of the down payment.

The down payment is the money that you put up front when you purchase a property. Down payments typically range from five per cent to 20 per cent of the total value of the property. The minimum down payment required to purchase a property is five per cent. There are different down payment requirements when you are purchasing. You can put as little as five per cent down payment, but if you are purchasing a rental or investment property you will need to put a minimum of 20 per cent down payment. The full amount of the down payment is payable when the sale closes.

Here are a couple of examples:

Example 1:
The buyers are buying a property with a purchase price of $500,000. They will be putting a 10 per cent down payment ($50,000). They removed subjects and it has become a firm offer on November 1st. They will be giving a deposit of $25,000 and they will be closing on January 15th. The buyers will need to pay the balance of the down payment on the closing date of $25,000 for a total down payment of $50,000.

Example 2:
The buyers are buying a property that is under construction and the developer is asking for a 10 per cent deposit. The property that they are purchasing is $619,900 plus GST. They have given a deposit of $61,990. The final purchase price with GST is $650,895. The buyers are only putting a down payment of 5% ($32,544.75), therefore, the buyers will get the difference back at the time of closing.

A Mortgage Expert can help you navigate through the mortgage process and help you find the best mortgage for your individual needs.