Deposit and Home Mortgage: When You Can Get It Back (and How to Avoid Losing It)
Buying a home is one of the most important steps in life, but also one of the most delicate. Between the purchase offer, preliminary agreement, and mortgage application, overlooking even a small detail can cost you thousands of euros. One of the most common questions is: if the mortgage is not approved, do you lose the deposit? In this guide, everything is explained clearly so you can avoid mistakes and protect your investment.
When You Are Entitled to a Deposit Refund
The confirmatory deposit (as provided for by Article 1385 of the Italian Civil Code) serves to guarantee the commitment between buyer and seller. However, there are several cases in which you can recover it.
If the Seller Defaults
You are entitled to a refund (often double) when the seller: does not vacate the property, conceals serious problems or defects, fails to disclose mortgages or legal constraints. In these cases, you can withdraw from the contract and obtain double the deposit paid.
If There Is a Mortgage Contingency Clause
This is the most important scenario. If the preliminary contract includes a mortgage contingency clause: if the bank refuses financing, the contract becomes ineffective, the deposit is fully refunded. Without this clause, you seriously risk losing everything.
Impossibility Not Dependent on You
You can also recover the deposit if: serious issues emerge during the property appraisal, events occur that make the purchase impossible.
Mutual Agreement or Contract Annulment
The deposit is also returned when: buyer and seller agree to cancel the deal, the contract has defects (error, fraud, etc.).
When the Deposit Is NOT Refunded
There are situations where the deposit is lost. This happens when the buyer fails to meet their obligations. You lose the deposit if you: withdraw without valid reason, fail to attend the closing (final deed), do not complete the required documentation, have your mortgage rejected and did not include a contingency clause. This is one of the most common (and costly) mistakes.
Mortgage Rejected: What Really Happens?
When the bank does not approve the mortgage, everything depends on the contract: With a contingency clause: no fault for either party, contract canceled, deposit refunded.
- Without a contingency clause: you are considered in breach, the seller keeps the deposit, and may also claim additional damages.
In some cases, the seller may even seek forced execution of the sale.
Important: You must prove good faith.
Even with a contingency clause, you must show that you: seriously applied for the mortgage, submitted correct documentation, did everything possible to obtain it. It’s best to approach multiple banks or work with a consultant.
Do I Have to Pay the Agency If the Mortgage Is Rejected?
Again, it depends on the contingency clause: If present you do not pay the commission; If absent you must pay it anyway
The Most Important Advice: Mortgage Pre-Approval
If you truly want to avoid problems, there is one key strategy: request a mortgage pre-approval before making an offer. This allows you to: know if the bank will finance you, increase your credibility, reduce the risk of rejection, negotiate better with the seller.
How to Avoid Losing Your Deposit
If you are about to buy a home, follow these rules: always include a mortgage contingency clause, run a mortgage simulation, request pre-approval, rely on a professional.
