Deposit & Deposit Financing
Michael Hallett • April 25, 2019
A deposit is a sum of money, which represents a portion of the purchase price, paid as good faith to the seller. Sellers and real estate professionals want buyers to be serious when they make an offer, so they will ask for the deposit. Typically, but there is no rule, deposits are equal to approximately 5% of the purchase price. For example, if the agreed to purchase price was $650,000 then the deposit paid would be $32,500.
In BC most deposits are paid when all subject clauses (financing, inspection, strata documents, etc..) have been removed and it’s now a firm and binding contract.
The deposit amount is made payable to the selling Realtors firm ‘IN TRUST.’ If it’s a private sale where there is no Realtors involved, the deposit will most likely be made payable to the sellers Lawyer’s trust account. Trust accounts are highly regulated and extremely safe.
During the conveyancing process for the purchase, the deposit will show up on the statement of adjustments prepared by the lawyer. It will display the purchase price as well as any debits/credits related to the transaction. The deposit will appear on the statement of adjustments as a credit to the buyer.
The DEPOSIT makes up a portion of the total down payment. The difference is made up by the mortgage financing that will total the purchase price.
Simple math outlining a 20% down payment for a purchase of $500,000.
- Purchase Price: $500,000
- 5% Deposit: $25,000
- 15% Down Payment: $75,000 ($100,000 = 20%)
- 80% Mortgage Financing: $400,000
Common sources of deposits are:
- Cash savings account
- Line of Credit
- Convert investments to cash (TFSAs, RRSPs, Stocks, GICs, mutual funds)
- Gift from an immediate family member (mom, dad, brother or sister)
Deposit Financing is available for someone that has a firm offer with all relevant ‘subjects’ removed on the home for sale. As well, they have received a firm and binding offer to purchase on the new home. Deposit financing allows a person to access the equity for a purchase before the sale completes.
Once all the deposit conditions have been met the deposit lender will the transfer the funds directly to the borrower within 24-36 hours.
Here is an example of the cost to obtain deposit financing.
- Deposit Amount Requested $25,000
- Lender Fee $ 1,250
- Total Loan $26,250
- Term Funds Required (days) 14
- Per Diem Interest $ 8.63
- Interest Paid for Loan Term $ 120.82
- Total Financing Charges $ 1,370.82
- Total Loan and Interest Paid $26,370.82
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One of the most common questions, “how long does it take to get pre-qualified?” My response, “how fast can you provide the information I need.”
Playing in the forest today. Always fun exploring. #mountainbikingmortgagebroker
Mortgage Brokering meets mountain biking and craft beer. A couple months ago I set for a bike ride with the intention of answering few mortgage related questions, mission accomplished. Any good bike ride pairs nicely with a tasty beer which we enjoyed @parksidebrewery. Hope you see the passion I have for brokering, biking and beer. @torcabikes #mountainbikingmortgagebroker
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Spotted a ski-bunny today @kirstinjhallett so I trapped ‘er. 📸 credit @troy.hartley
Aidan leading the pack up the Lemming Line in seek of fine fresh powder.
Beautiful British Columbia! A cold winter day at its finest.
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Happy Holidays. Seasons Greetings. Merry Christmas. All the best from Kirstin, Aidan and Michael. Enjoy your family time.
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My sons intro to operating a side-by-side on his own. Watch to the end.
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This would have been a fun stunt once upon a time!
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I saw this hat on Instagram, that very moment I knew I needed it. As a BC boy born and bred The Outdoorsman hat needed to be added to my collection. As someone who loves BC and most things outdoor, I’m now glad I have a cool hat to wear and fly the flag of BEAUTIFUL BRITISH COLUMBIA. It will be in my bag for all post-exploration celebratory cold pints. If you want to check them out or add one to your collection go to @nineoclockgun ...and yes my facial hair matches the hat as well.
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This is a great start to the day!
No better way to share the great outdoors than with friends. @troy.hartley @mike_ilic711 @j_penner70
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Aidan is captaining the watercraft, mom in just the passenger. Kalamaka Lake.
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Saratoga Beach fire.
Canadian tuxedo.
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Does anybody need or want any firewood? It’s free...you come pick it up.
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When you apply for a mortgage, your employment history and status carry a lot of weight. Even if you feel secure in your job, lenders need proof that your income is reliable and will continue. To them, your employment status is one of the strongest indicators of whether you can make your mortgage payments long term. Here’s how lenders typically view different employment situations: Permanent Employment This is the gold standard. Once you’ve passed any probationary period and hold permanent status, lenders see you as a lower risk. It shows that your employer is committed to you, and your income is steady. Probationary Periods If you’re still on probation—usually 3 to 6 months, though sometimes longer—lenders may hesitate. That’s because your employer can end your contract without cause during this period. Once probation is over, you’re considered more secure. That said, context matters. If you’ve worked with the same company for years as a contractor and just transitioned into full-time employment, lenders may accept a letter from your employer confirming that probation is waived. Documentation is key here. Parental Leave Being on or about to take parental leave doesn’t mean you can’t qualify for a mortgage. As long as you have a letter from your employer guaranteeing your position and return-to-work date, lenders can use your regular salary—not your leave income—when assessing your application. Term Contracts This is one of the trickiest categories. Even highly skilled professionals with strong incomes can face challenges here. A term contract has a start and end date, which makes lenders question the stability of your future income. To use term-contract income, lenders generally want to see at least two years of history, or proof that your contract has already been renewed. The more evidence you can show of consistent employment, the stronger your case will be. The Bottom Line If you’re planning to apply for a mortgage, it’s important to understand how your employment status could affect your approval. Whether you’re starting a new job, coming back from leave, or working under contract, lenders want documentation that proves your income is reliable. 📞 If you’ve recently changed jobs or are planning a career shift, let’s connect. I can help you prepare your file so you qualify with confidence and avoid surprises in the approval process.
When you’re buying a home, two terms often cause confusion: deposit and down payment . While they’re related, they serve very different purposes in the homebuying process. Here’s what you need to know. What Is a Deposit? A deposit is the money you provide when you make an offer on a property. Think of it as a show of good faith that proves you’re serious about purchasing. How it works : Typically, you provide a certified cheque or bank draft that your real estate brokerage holds in trust. If your offer is accepted, the deposit remains in trust until the deal moves forward. If negotiations fall through, the deposit is refunded. Connection to your down payment : Once the sale is finalized, your deposit becomes part of your total down payment. Why it matters : The amount is negotiable, but a larger deposit can make your offer more attractive in a competitive market. Keep in mind, however, that if you back out after conditions are removed, you risk losing your deposit. What Is a Down Payment? Your down payment is the amount you contribute toward the purchase price of your home when securing a mortgage. Minimum requirement : In Canada, the minimum down payment is 5% of the home’s purchase price. Anything less than 20% requires mortgage default insurance. Sources : Down payments can come from your savings, the sale of another property, RRSP withdrawals (through the Home Buyers’ Plan), a gift from family, or even borrowed funds. Example: How They Work Together Imagine you’re buying a $400,000 home with a 10% down payment ($40,000). When you make your offer, you provide a $10,000 deposit . Once conditions are met, that deposit is transferred to your lawyer’s trust account. At closing, you add the remaining $30,000 to complete your full down payment. The lender provides the rest—$360,000—through your mortgage. The Bottom Line Your deposit shows commitment and secures your offer, while your down payment is what makes the mortgage possible. Together, they work hand in hand to get you into your new home. 📞 If you’d like clarity on deposits, down payments, or any other part of the mortgage process, let’s connect. I’d be happy to walk you through it step by step.
