When is the 5% deposit due???

Hi there

Hoping someone can help me... we are signing our contract tomorrow. YAY! There has been no mention of when the deposit is strictly due.

Is there any kind of 'grace period' for providing the 5% deposit to the builder? Our bank wants to see the signed contract before any money is exchanged.

Thanks

You pay that deposit when you sign the contract.

Due at signing the building contract - by law. You do have about 7 days to pay that .. but that depends on the relation with your builder .. it can be flexible .. however, i don't think the builder proceeds with anything till you pay them the money ..

cheers!

Hmm... our deposit was the first progress payment, due at slab down.

Good luck with your signing

we're paying ours tomorrow... bye bye 8.5k. i'll miss your interest!

All builders are different obviously, and lenders too. Our lender wouldn't release any $ until we had contracts and council approved plans.... luckily our builder didn't ask for it until then. After our plans were council approved and contracts signed, and lender was happy with all the docs.... they issued the "Authority to Commence Construction". Once the builder got this, we were sent the invoice for the balance of the 5% deposit which had to be paid in 5 days.
I'd be surprised if they want you to pay it on the spot, without an invoice and time to pay, or a chance to get the paperwork to your lender..... but then again I've read some pretty strange stories on here!
Good luck tomorrow! buzz

Cheers... thanks everyone!

I'm sure it will all work out.

We are building with m3tr1c0n, and although the 5% deposit is due at contract signing, it is now almost 2 months later as we sort out post contract variations and apply for finance. Ours is an unusual situation though, and we had to sign the contract early before leaving the country. We also have land that is not titled yet, so it's not urgent that things get started right away.

What we were told is that as long as we stay in communication and show evidence that we are serious, they will be flexible.

From what I understand, the standard according to my mortgage broker is to sign the contract subject to finance, obtain finance approval, and only then pay the deposit. That gives the buyer the best protection as they don't have to claw back the money if finance doesn't work out. Of course a builder will tell you it's standard to pay the deposit at contract signing, as that gives them the best protection in case you cancel It's all a question of who has the power to get an advantageous position for themselves.

we paid a 2k deposit and we signed a 'pre-contract' type thing.. which was basically the money to cover soil testing blah blah blah.

Then nothing more was paid until the contract had been signed (by both parties) and had been sent to the bank. Only then did the bank release the balance of the 5% to the builder. Of course.. builder did nothing until that money was received.

We signed our contract last week and the builder expected the 5% deposit at the time of signing.

We did however have a solicitor look over the contract and he said that according to the contract's terms we were only needed to pay the deposit once the builder has provided us with proof of them obtaining the builders warranty insurance.

I asked the builder about this and they told me that they would only get the warranty insurance if the deposit had already been paid!

It's easy to get confused when everyone is telling you different things

Our bank wants to see the final approved council plans before paying the 5% and our builder does not want to draw final plans until they have the 5%

Which is why you ideally should pay the 5% out of your own funds. Otherwise, you can go round and round in circles forever and never get anywhere. If you don't have the cash to do that (say, because you chucked all your equity into the land already), then you usually need to organise bridging finance - which might be a loan from family, a personal loan or whatever... Banks don't usually pay out a cent until the building permit is through and they have the plans in their hot little hands.

It's usual in Vic to pay the 5% on signing of the contract - it's written into the standard HIA contract, and should be made clear by the builder from the start (or any variation to the standard arrangement that they might impose). Our builder gave us a detailed "procedure of purchase" document which set out exactly how payments would work; what was due when etc. I think we actually paid $600 for soil testing and to reserve a start date, then 2% at tender, and the balance of the 5% on contract signing. Hard to remember now...

We made an initial 1000 payment as a deposit to hold the price and order the soil tst.
At our tender appointment, 2% was due.
At the contract appointment the balance of 5% was due.

Our builder posted us an invoice for the 5% deposit a few days after we signed the contract. But it didn't stipulate when it was to be paid by. Our start date is end of Jan, so said as long as it was paid before then..

Our bank set us up a line of credit to draw down on to make our first payment, as we had used all our funds to purchase the land outright, then would convert this loan to a conventional mortgage after this time - has worked well for us, paid the 5% a few days ago.