All Topics / Creative Investing / Standard vendor terms
Hi guys,
What are standard vendor finance terms(I understand there are no hard rules)
20% vendor finance (ie deposit) over a 24 month period? Is there a list with these types of thing I could view or some training featuring this?
Regards.
Hi David
Some of the techniques used for Vendor Finance are:
1. An Instalment Contract
2. A Second Mortgage Carry-back
3. A Lease/OptionAs you mentioned 20% vendor finance as a deposit, I believe you're considering a Second Mortgage Carry-back (SMCB). Our last two SMCB's were structured as follows:
a. 20% of the purchase price was carried back by the seller, over 5 years. We pay $420 per month to the seller and this $420 comes off the amount owed. We then have a balloon payment for the remainder at the end of the 5 year term. However, as you will have seen, it's an interest free loan.
b. 20% of the purchase price was carried back by the seller over three years with no payments and no interest over that 3 years. If we haven't paid it off in three years, we commence payments, over another three years at 5% interest, with the amount owing to be paid off at the end of this second three year period.As you can see, it boils down to whatever you can negotiate.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Interesting ball game indeed!
Thanks for sharing your knowledge.
You must be logged in to reply to this topic. If you don't have an account, you can register here.