Is a House Deposit Refundable?

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When you buy a house, you need to pay a purchase price – this is usually divided into the deposit you’ve saved up, and the remaining balance. For sellers, the deposit is a sign of good faith that the buyer will comply with the requirements of the agreement. The deposit required can vary and is subject to mutual agreement between the buyer and the seller. 

But what happens if you’ve paid the deposit and changed your mind? Is a house deposit refundable? We’ve outlined everything you need to know about house purchase deposit refunds below.

Is a house deposit refundable?

If you no longer wish to buy a property, you may withdraw from purchasing once the contract of sale has been exchanged. This will typically be in the ‘cooling off period’, which is usually 5 business days in New South Wales. So is a house deposit refundable? Yes, but if you have signed the contract and paid a deposit, you will be subject to a forfeiture of normally 0.25% of your purchase price. The balance of the deposit will then be refunded to you.

Learn more: what is the cooling off period?

Additionally, you will be entitled to rescind the contract and get back the entire deposit amount if:

  • The vendor’s title is found to be defective
  • Any statutory warranty made by the vendor is disproved
  • The vendor failed to disclose any easement right existing on the property

Learn more: caveat on property

Can you get your deposit back on a house after the cooling off period?

A contract of sale for a residential property must include a statement about the cooling off period. You can waive the cooling off period by giving a Section 66W Certificate of the Conveyancing Act 1919 signed by your property lawyer. But if such a statement is not included in the contract, you may withdraw at any time before the sale is finalised even though the cooling off period has expired. In such a case, you will be entitled to a refund of the whole deposit without any forfeiture.

How to withdraw from a contract during a cooling off period (NSW)

If you propose to purchase a property in NSW, your ‘cooling off period’ starts on the date of exchange of the contract and expires at 5.00 p.m. on the 5th business day after exchange. In order to withdraw from or cancel the contract of sale during the ‘cooling off period’, you need to follow certain guidelines. These are outlined below:

Written notice

To withdraw from a contract within the stipulated ‘cooling off period’, you need to give a written notice to the seller. Setting out the reasons for such withdrawal is necessary. The notice must be signed either by you or your solicitor, and must be served either upon the seller or the seller’s solicitor or any other agent mentioned in the contract. However, the notice should be served only during the ‘cooling off period’.

The service of the notice will be rendered ineffective if served after settlement of the sale has taken place. The notice, once duly served, cannot be revoked except with the consent of the seller.

Fees and costs

On top of forfeiting 0.25% of your purchase price, you may also be liable to compensate the vendor for any loss incurred by the vendor over and above the forfeited amount. 

Owen Hodge is here to help

If you wish to withdraw from purchasing a property or have any questions related to “is a house deposit refundable?”, feel free to contact our team of lawyers or conveyancers at Owen Hodge for our advice and guidance. 

Is a house deposit refundable: FAQs

Can I lose my deposit on a house?

While a five-day cooling off period after exchange is standard when buying a house in NSW. If you pull your offer during this period you will be required to forfeit 0.25% of the purchase price. The seller will then have 14 days to return the rest of your deposit. 


However, if you withdraw the sale after the five day cooling off period then the deposit is typically non-refundable. 

Do you lose your deposit if finance falls through?

A ‘subject to finance’ clause is often a standard condition in home purchase contracts of sale. As a buyer, it gives you the option to back out of the purchase and still get your deposit back, if you can’t secure a home loan. Without this clause, your deposit may be considered forfeit. 

What is a holding deposit when buying a house?

A holding deposit is a small deposit a buyer will pay. It forms part of the full deposit and may be requested by the real estate agent to secure the buyer’s interest. The holding deposit is usually paid before the sale contract is signed, so it is fully refundable. 

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