When you purchase a house or block of land it is usually a requirement that you supply a deposit which equals 10% deposit of the purchase price when you exchange contracts.
Why is the deposit 10% of the purchase price?
The usual deposit is 10% of the purchase price as this has been held to represent a sufficient guarantee that the contract will be completed by the purchaser. It is also seen as enough financial incentive for them not to consider withdrawing from the purchase after exchange, and forfeiting the deposit.
What if I don't have the full 10% deposit as required?
As a purchaser, if you do not have access to funds for the full 10% deposit you can negotiate with the vendor to pay a reduced deposit of less than 10%. You should discuss this with your conveyancer or the real estate agent as early as possible.
Sometimes vendors will not agree to accept a deposit that is less than 10%. In this instance a further alternative is a deposit bond or bank guarantee which can be organised with your banker.
Finally, if you are selling a property as well as buying, you may be able to negotiate releasing the deposit from your sale in order to use those funds as a deposit in your purchase.
All options come with their own benefits and risks and largely depend upon the individual circumstances and the consent of the other party.
Please note the answers provided are for your general information only and we ask that you call our office on 02 6331 2911 to obtain detailed legal advice for your individual situation.
Rachael Thurn | Property Conveyancer | Kenny Spring Solicitors