FACT OR FICTION?

The deposit paid for the purchase of a property will not be applied towards towards the purchase price or down payment.

FICTION

The deposit paid during the purchase of a property will be applied towards the purchase price or down payment when the deal closes.

When your client is ready to make an offer to buy a home, they will need to provide a deposit. The deposit forms part of their down payment, with the rest to be paid when they “close” the purchase of their new home.

The deposit demonstrates your client's commitment to the seller to complete the purchase. The deposit is reassurance that your client is acting in good faith and have the means to purchase the home. It also shows that they are comfortable taking on some level of risk by putting down a deposit until the deal closes.

References:

*Reco's Ask Joe Column

*Financial Consumer Agency of Canada