When Is My Down Payment Needed By?
After countless Saturdays & Sundays spent touring open houses, months of showings & a handful of unsuccessful bidding wars, your offer is finally accepted – rejoice! While we work on mortgage approval, you will need to prepare your end of the financial commitment: the down payment.
The first part of your down payment is the deposit. The amount of your deposit, & when it is due, will depend on your offer & could be required as soon as your offer is accepted, or once you “remove subjects.” Make sure you are aware of how much & how soon the deposit is needed as it can sometimes take a few days to free up the funds, depending on what accounts you are drawing from (RRSPs can take as long as a week to release).
A common question I am asked is whether a deposit counts towards your down payment & it certainly does. The difference between your total down payment & your deposit will be due at closing, but usually your lawyer/notary will ask for the funds when you go in to sign the week before your purchase completes.
For instance, let’s say you are buying a $500k property with 20% down ($100k) & a deposit of $25k is due upon subject removal. The purchase closes on Nov 28th. In this case, you will need $25k ready once you remove your subjects & the remaining $75k must be ready a day or two before closing on Nov 28th.
If you are getting money from family, liquidating stocks or withdrawing funds from your RRSPs, carefully examine your deposit due date & closing date to ensure you will have all the necessary funds ready in time.