I am planning to sell a property I own on vender finance im not sure where i should be setting the interest rate.
The property has a value of $310,000 and I thought a $10,000 deposit.
Rents are around $360 per week so i thought $450 might be a good figure.
I want to make the deal workable for both parties and I thought an interest rate around 6.8% would be fare.
I would apreciate you thoughts on this.
Also I understand I can do at least one deal without being licenced but have to notify ASIC on a for COl1 form and have some obligations to report to them and give 6 monthly advice to the buyer of the state of the mogage.
All that is fine Im just wondering what other things do i need in regard obligations to advise the buyer of the conditions and warnings of the morgage.
If it all goes OK thats fine but I dont want to end up in court in 3 years arguing that they didnt understand the implications of such a loan.
What advice other than seeking legal advice do you think i shoud be doing.
This all cant be that hard I have been buying and selling property for 40 years now.
I dont want to make a career of this just thought it might be a better way to sell one of the houses i have that needs some work and might be relatively easy to improve the value and benefit someone who normally would be locked out of the home ownership markett.
I would appreciate any advice.
You want the interest rate to mirror your loan with your bank. Don't set it at 6.8%, as if interest rates hit 9% again, you are going to suffer a huge loss.
Set it at Standard Variable Rate for your bank plus x%. In the deal that I have, it is 1.5% above the SVR of my bank.
Make sure that the borrower gets independent legal advice from someone who understands vendor finance deals and that they have the capacity to pay the loan.
Thanks Matnz, I think your right must be linked to variable rate I dont have any mortgage on the property but would like a better return than what i can get as rent and this might attract a better occupier. The property does need some work so it is an opportunity for someone else.
The one question im not sue about is can I legally offer vender finance ASIC site is very confusing I emailed them but they wouldnt say as normal make laws that cant be interpreted by a normal person and wont give an interpretation.
For COI1 seas, You are required to fill out this form if. [a] are, or will be a credit provider before 1 July 2010 or after 30 June 2010 and are not or will not be a licensee.
Dosent that sound like a load of rubbish..
Does anyone know if I as an owner of property can offer Vender finance without a license.
Hi rusty
The question as to whether you can offer your property for sale with a vendor financed credit contract, without the need for an Australian Credit Licence (ACL), revolves around the question; are you conducting the transaction 'in the course of a business'? The general consensus is that you probably won't need an ACL, if you sell one of your properties with a VF credit contract, i.e. an Instalment Contract or Deposit Finance. Of course, this is just a personal opinion. Check with your lawyer.
However, not needing an ACL for this transaction does not mean that the transaction doesn't have to be conducted in accordance with ASIC 'Responsible Lending' requirements which are quite extensive. Like Matt, we insist that all our buyers receive independent legal advice prior to authorising the legal paperwork.
Managing the loan that results from a VF credit contract is very different from self managing a rental property. There are draw down reports, notices of payment change, statements (with ASIC prescribed information in them) and there are defined ways to handle buyers in 'hardship'. My advice is to find a specialist vendor finance management company.
As Matt said, most Instalment Contract interest rates are locked to the underlying loan of the vendor, with the vendor's rate being called the 'Reference Rate'.
Our website at http://www.negative2positive.com.au has been setup to promote our service, i.e. to help vendors sell their properties with VF. However it does have a lot of good free information that should help get your head around what's involved.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
