Home renovation: How much deposit should you pay?
Requesting a deposit from homeowners before the work has started is a common practice in the home renovation industry. In general, a deposit is around 10% to 15% of the home renovation project cost. This first payment fulfills two main functions for a general contractor:
1. Confirm your intentions
The deposit confirms your intention to start the project: general contractors are busy and accepting your renovation project usually means refusing another equally lucrative home renovation project. Therefore general contractors need to know you’re financially committed.
2. Purchase of construction materials
The deposit also allows the general contractor to purchase the materials needed for your home renovation project: in general, general contractors avoid using their own capital for the purchase of customers’ materials because (1) they are often short in terms of working capital and ( 2) paying for customers’ materials means being subject to the financial risk of not being reimbursed if the client decides to cancel the home renovation project early on for whatever reason.
- It is important to always request an invoice for each payment made to a general contractor: invoices should include TPS & TVQ taxes in order to avoid any problems in court in case of a dispute.
- We advise you to pay electronically (credit card, bank transfer or paypal) and not by cash to keep track of your transactions. On the Billdr platform, you can pay via credit card.
- Since in the vast majority of cases, a general contractor requires a deposit, we also suggest that you ask for a retainer at the end of the home renovation project of 15% to 20%: the retainer allows you to make sure that the home renovation project is completed as per your initial agreement with your general contractor.