Hi,
Does anyone know or have used vendor finance? My mother is considering purchasing a property using vendor finance to purchase a half finished house (which will be finished once sold).
I supect that the current owner has run out of funds and unable to finish the house, hence the reason of offering vendor finance.
I am interested in knowing how this vendor finance thing works. Is it the same as a bank loan? I’ve heard if you are late with a repayment the vendor has the right to take possession of the property?! Any help/suggestions would be greatly appreciated!
Thanks!
[thumbsupanim]Usually they charge a higher rate of interest and a higher price to get their profit, the vendor is effectively the bank. In this circumstance however it may be a case of the vendor needing cashflow in which sence you are doing them a favour, therefore you should get charged market or discount rates. Do some research but could be a good option to come up with a win win solution. Goodluck!!
Vendor finance is simply where the vendor is offering lend the purchaser the funds to purchase the property instead of them having to take a mortgage out through a bank/other institution. YOu need to look over the contract carefully to check things like interest rate, default rate, fees, charges, penalties for early payout – treat it like a normal instituation and shop around. Sometimes the interest rate or the purchase price is higher so just check into those things too. Some clients prefer to take 20% vendor finance and finance the rest through a main stream lender then organise to pay back the vendor finance asap.
Anita Marshall
Mortgage Planner/Managing Director
Advanced Finance Solutions
http://www.advancedfinance.com.au
[email protected]
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