I would never release a deposit before settlement. Seen it go wrong too many times. If the vendor need the deposit for another purchase they can apply at the bank for a deposit bond in its place. If they want the money for 'other' things, then that is a clear red flag and an absolute 'no'.
Wow really? As someone who has been on both side of a section 27 and was not up to anything dodgy, then that statement could be taken the wrong way.
I'm sorry I don't understand how my statement could be taken the wrong way???
I 'stated' my position - I would never release early. I didn't make any comment (judgmental or otherwise) about people who do choose to release early. They can do what they want; I personally would not take that risk.
I stated that I have seen it go wrong too many times. I have. I try to learn from others mistakes, and I have seen this mistake (in my opinion) happen time and time again. It doesn't mean that it is 'always' going to create issues, but it does mean the risk is real and I chose not to take that risk. Others may choose differently, but that is their choice and their risk to take.
Personally I am not do much worried about being 'swindled' (although that too is a risk), I am worried about genuine, reasonably likely circumstances whereby the deposit is spent and settlement is unable to occur. Settlements are delayed and cancelled at the last minute all the time for a LOT of reason (the financial institutions being a huge factor in this). I haven't even 'blamed' vendors for 'asking' for this favour. As a vendor they are in the stronger position and the risk isn't really with them. If they have a buyer who is willing to release early, then they would be silly not to ask - it is in there interests to ask. But as a buyer, no. I would never release early.

For me, buying real estate, whether as a personal residence or an investment, should be approached as a business decision and risks should be factored and mitigated as much as possible. It is amazing how easily even the simplest real estate transaction can be derailed.