Can anyone tell me how vendor finance works from a practical perspective? If, for example, I wanted the vendor to lend me 10% of the purchase price is the best way for the vendor to secure that loan via a caveat, a second mortgage or a deed between the two parties? Which way is the easiest, which way is the cheapest and which way is a vendor more likely to want to go to ensure that he/she gets repaid?
Cheers
K
Hi Linar
The only difference between a first and a second mortgage is that the first mortgage was placed onto the property's title ahead of the second mortgage, i.e. for both loans a mortgage was signed but the "first mortgage" was placed on the title before the next mortgage (the second mortgage).
We often supply and receive second mortgages. We find it is easier to secure our mortgage with a caveat. If you try to register your mortgage on the title (other than in Qld), it tends to get messy as you need to get a Deed of Prioity in place with the first mortgage holder. We've found that a caveat protects our mortgages well. I hope that helps.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
I have just asked a few lenders if they will accept these sorts of arragements and was knocked back. Lenders now seem to be frowning on vendor finance.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for that.
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