Closing costs
Hello, my downpayment is in rsps.
Can the deposit I make on the property be used for the closing costs?
Thank you
Can the deposit I make on the property be used for the closing costs?
Thank you
Closing costs
- Last Updated:
- Jul 25th, 2021 3:58 pm
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- SCORE
- Sternchen30890 [OP]
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- Jan 28, 2019
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27 replies
- rapashoo
- Deal Addict
- Mar 22, 2010
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It cannot. The deposit you are putting down is going towards the seller's account for them to discharge their mortgage. You have to come up with your own closing costs separate from the down payment.Sternchen30890 wrote: ↑ Hello, my downpayment is in rsps.
Can the deposit I make on the property be used for the closing costs?
Thank you
- Sternchen30890 [OP]
- Member
- Jan 28, 2019
- 442 posts
- 209 upvotes
I thought it becomes part of my downpayment at closing.
Since my downpayment comes from an rsp what happens to my deposit at closing?
- Sternchen30890 [OP]
- Member
- Jan 28, 2019
- 442 posts
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It can. My broker just confirmed it.
The deposit I make will cover the lawyer fees at closing
- FaisalS831999
- Jr. Member
- Apr 20, 2017
- 168 posts
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Let's say you have no finance clause, and you are unable to close on closing (assuming you have exhausted all options). The deposit that you put down then would go to the seller. Any cost incurred ie lawyer will be payable out of your pocket.
- Sternchen30890 [OP]
- Member
- Jan 28, 2019
- 442 posts
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I have a financing clauseFaisalS831999 wrote: ↑ Let's say you have no finance clause, and you are unable to close on closing (assuming you have exhausted all options). The deposit that you put down then would go to the seller. Any cost incurred ie lawyer will be payable out of your pocket.
- ZxExN
- Deal Addict
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- Nov 30, 2005
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The deposit you gave to the seller held in trust is gone and is used to lower the balance of the purchase. You will need to cover all closing costs using the the money the bank will lend you (they tend to overlend to cover these sort of fees) and your downpayment and/ or you write the lawyer a cheque for any amount owing.
- Toukolou
- Deal Fanatic
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- Dec 4, 2009
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Lol, in today's market, your deposit will likely only cover the real estate commission.Sternchen30890 wrote: ↑ It can. My broker just confirmed it.
The deposit I make will cover the lawyer fees at closing
There's still a multitude of closing costs on top of that. You'll want to budget ~3-5% of the purchase price. And these are typically not rolled into the mortgage. Plan to set that amount aside, on top of any deposit.
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- seatiger
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- GVA
depends..in BC the commission is under 2.5%. deposit in often in 5-10% rangeToukolou wrote: ↑ Lol, in today's market, your deposit will likely only cover the real estate commission.
There's still a multitude of closing costs on top of that. You'll want to budget ~3-5% of the purchase price. And these are typically not rolled into the mortgage. Plan to set that amount aside, on top of any deposit.
profit on 6/23/2021 = 117.61% since 11/10/2020 to be exact😎
- jmc111
- Deal Addict
- Mar 10, 2014
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Due to the lack of clarity and detail of OP's question, it would not be easy to answer the question. Is this deposit going directly to a new builder or resale home?
A purchase from a new house builder means a scheduled number of payments. A resale means the certified cheque to the selling agent in trust. In either case, this deposit is strictly reducing the price of the home and not part of the closing costs (i.e. lawyer fees, title, land transfer tax, property taxes any maintenance fees, moving costs, start up costs for utilities, etc.).
A purchase from a new house builder means a scheduled number of payments. A resale means the certified cheque to the selling agent in trust. In either case, this deposit is strictly reducing the price of the home and not part of the closing costs (i.e. lawyer fees, title, land transfer tax, property taxes any maintenance fees, moving costs, start up costs for utilities, etc.).
- realtorhome
- Sr. Member
- May 3, 2013
- 754 posts
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- Toronto
Yes and no. Depends how you see it.Sternchen30890 wrote: ↑ Hello, my downpayment is in rsps.
Can the deposit I make on the property be used for the closing costs?
Thank you
A few days before closing, your lawyer will sum up what you need to pay (ie. purchase price, lawyer fees, adjustments, land transfer tax, etc.).
The lawyer will also sum up what you don't have to pay, this will include the mortgage the lender will be sending to your lawyer and the deposit you made.
The difference "sum of what you need to pay - sum of what you don't have to pay" is the amount you need to cover. You will need to provide a bank draft to your lawyer for this amount, whether it comes from cash, credit line, rrsp, credit card, etc.
So the deposit you made is not gone, it's mixed into the calculation.
- oasis100
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- Mar 27, 2004
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thats incorrect informationFaisalS831999 wrote: ↑ Let's say you have no finance clause, and you are unable to close on closing (assuming you have exhausted all options). The deposit that you put down then would go to the seller. Any cost incurred ie lawyer will be payable out of your pocket.
there seller has to show proof of loss. ie selling it later at a reduced value. claim for mortgage and lawyer expenses. but it's not automatic that the entire deposit is forfeited.
Full-time Realtor
- jmc111
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FaisalS831999 wrote: ↑ Let's say you have no finance clause, and you are unable to close on closing (assuming you have exhausted all options). The deposit that you put down then would go to the seller. Any cost incurred ie lawyer will be payable out of your pocket.
It's a ripple effect. If you cannot close, you will be sued by the seller for losses incurred for the price of the home as well as the seller may have bought a home and expecting to use the proceeds to pay. The loss of deposit is only the start of the pain. There will be further costs that the buyer will end up paying if he/she cannot close. An Agreement of Purchase and Sale is a binding contract and there is no cooling off period. Both parties must follow through with the deal.
- licenced
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- Jul 3, 2011
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- Thornhill
Going to expand a little more on realtorhome's comment.
The deposit you made regardless of where it is currently held is intended to go to the seller as an offset against the agreed upon purchase price.
On closing day the amount you have to pay and deliver to your lawyer includes the balance of the purchase price plus all the things mentioned by realtorhome.
That is arrived at when you lawyer totals up all those amounts, subtracts the deposit paid regardless of where it's being held and tells you to attend at their office with the difference.
So essentially yes, your deposit goes against closing costs which is the sum of all the things mentioned by realtorhome.
The deposit you made regardless of where it is currently held is intended to go to the seller as an offset against the agreed upon purchase price.
On closing day the amount you have to pay and deliver to your lawyer includes the balance of the purchase price plus all the things mentioned by realtorhome.
That is arrived at when you lawyer totals up all those amounts, subtracts the deposit paid regardless of where it's being held and tells you to attend at their office with the difference.
So essentially yes, your deposit goes against closing costs which is the sum of all the things mentioned by realtorhome.
- Sternchen30890 [OP]
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- Jan 28, 2019
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- seatiger
- Deal Addict
- Mar 30, 2017
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your deposit directly goes to brokerage to cover commission, in name of seller's expenses, dont fool yourself lolSternchen30890 wrote: ↑ Since,when do I as a buyer pay the commission
profit on 6/23/2021 = 117.61% since 11/10/2020 to be exact😎
- Furcorn
- Deal Addict
- Jun 7, 2017
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The thread is not about failing to close, and although what you say tends to be true, in such an event the seller would have to pursue it.
Let's get back on topic: The deposit is not used for administrative closing costs.
- Sternchen30890 [OP]
- Member
- Jan 28, 2019
- 442 posts
- 209 upvotes
My broker said the deposit I used for lawyer feesZxExN wrote: ↑ The deposit you gave to the seller held in trust is gone and is used to lower the balance of the purchase. You will need to cover all closing costs using the the money the bank will lend you (they tend to overlend to cover these sort of fees) and your downpayment and/ or you write the lawyer a cheque for any amount owing.
My downpayment is in rsps
- Sternchen30890 [OP]
- Member
- Jan 28, 2019
- 442 posts
- 209 upvotes
- Sternchen30890 [OP]
- Member
- Jan 28, 2019
- 442 posts
- 209 upvotes
That's,what I was told. I bought a house for 200Klicenced wrote: ↑ Going to expand a little more on realtorhome's comment.
The deposit you made regardless of where it is currently held is intended to go to the seller as an offset against the agreed upon purchase price.
On closing day the amount you have to pay and deliver to your lawyer includes the balance of the purchase price plus all the things mentioned by realtorhome.
That is arrived at when you lawyer totals up all those amounts, subtracts the deposit paid regardless of where it's being held and tells you to attend at their office with the difference.
So essentially yes, your deposit goes against closing costs which is the sum of all the things mentioned by realtorhome.
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