The standard deposit on exchange in NSW is 10% of the purchase price, paid to the seller's agent or conveyancer to hold in trust until settlement. You can ask the seller to accept 5%, or use a deposit bond, but the seller does not have to agree.
This is the second question Marcelino is asked most. Clients often confuse two different things: the deposit for the contract, and the deposit your lender needs. They are not the same.
Contract deposit vs loan deposit
| Contract deposit | Loan deposit | |
|---|---|---|
| What it is | Money paid at exchange to secure the contract | Your own savings toward the price |
| Usual amount | 10% of the price | Often 5% to 20%, depending on the lender and schemes |
| Who holds it | The agent or seller's conveyancer, in trust | Paid at settlement |
| When paid | At exchange (or in two parts with cooling off) | At settlement |
Your contract deposit forms part of your contribution at settlement. It is not an extra cost.
Your deposit options
- 10% at exchange. The standard position
- 5% deposit. Ask before exchange. The contract usually says you must pay the other 5% if you fail to settle
- Deposit bond or guarantee. An insurer guarantees the deposit for a fee, so you do not need the cash at exchange. The seller must agree to accept it
- Split deposit with cooling off. It is common to pay 0.25% at exchange and the balance when cooling off ends
Holding deposits
An agent may ask for a holding deposit to show you are serious before exchange. In NSW, a holding deposit is generally refundable if you do not exchange. It does not create a binding contract, and the seller can still sell to someone else.
Can you get the deposit back?
Many buyers think the deposit is always refundable if they change their mind. It is not.
| Situation | What happens to the deposit |
|---|---|
| You pull out during cooling off | You lose 0.25% of the price; the rest is refunded |
| You pull out after cooling off | The seller can usually keep the full 10% deposit |
| You fail to settle after a Notice to Complete | The seller can usually end the contract and keep the deposit |
| The seller fails to settle | You are usually entitled to the deposit back, plus possible damages |
| An off the plan contract is ended under the sunset clause | The deposit is usually refunded |
Early release of deposit
Some sellers ask for the deposit to be released before settlement, often to pay a deposit on their next home. This puts your money at risk if the sale falls through. We check any early release clause carefully.
Common questions
FAQs
Is 10% deposit compulsory in NSW?
No, but it is the standard. A lower deposit needs the seller's agreement.
Who holds the deposit?
Usually the seller's agent, in a trust account, until settlement.
Can I use a deposit bond at auction?
Only if the seller has agreed in advance. Check before auction day.
City Peak Conveyancing acts on NSW property only. This page is general information, not advice about your circumstances.