Vendor Terms/Long Term Settlement – Please Help

Hi everyone,

Here is what I have in mind (I know it is not new) and I need some clarification on how it can be done and if anyone has done it before:

I am looking for vendors who would be prepared to sell their property on following vendor terms:

1. Get 60%-70% of the sale price upfront
2. The remainder of the money are paid in 5 years
3. Calculate the interest on the remainder of the money (from 5% – 8% PA non compounding) and add it to the sale price of the property

For example:

Asking price 500k
The initial payment to the vendor 300k
Outstanding balance is 200k

There are 2 options available to the vendor:

1. I will pay the outstanding balance together with interest in one payment at the end of 5 years, in which case I will offer 8% interest on the outstanding balance calculated as following:
200k * 8% = 16k per year
16k * 5 years = 80k
That brings the sale price to 580k and outstanding balance to 280k

2. I will pay monthly payments to the vendor plus the outstanding balance of 200k at the end of 5 years. In this case I can afford to pay only 6% interest:
200k *6% = 12k per year = 1k per month payments
That brings the sale price to 560k.

The benefit to the vendor is that he/she gets that interest in the sale price hence (in case of pricipal place or residence) it is tax free.

I understand that it will be hard to find vendors like that, but I am sure it is not impossible.

Now, here are some questions that I have:

1. Am I being too ambitious to get this terms from the vendor?
2. Can I structure the contract in such a way that if the vendor agrees to that, I can then ask the bank to give me 80% of the final sale price (either 560k or 580k)

Look forward to your comments/suggestions/criticism

Kind regards,

Stan