Hi Everyone
I’m about to emark on my first vendor finance deal in Qld. Solicitors are saying a second mortgage for the vendor is required and no solicitor worth anything at all would agree to a caveat for their client (the vendor). However, I have heard via seminar gurus that a caveat is the way to go. I’m wondering if anyone who has done a vendor financed purchase can tell me of their experience.
Also, I’m wondering what terms tend to be the normal settling point in the vendor finance negotiations. I’m aiming for 25% vendor finance to be paid as a balloon payment 5 years after settlement date.
Appreciate all comments
Jennifer[biggrin]Hi Jennifer
Must admit i have done one or 2 over the years.
I assume from your post you are actaully purchasing a property with the Title transferring Title to you the purchaser and then repaying a percentage of the purchase price to the Vendor down the track.
I must admit i am suprised that any Vendor would allow capitalisation of interest for a 60 month period but assuming that they do if i was the Vendor i would want to register my interest by way of Registered Second Mortgage.
In all of the deals i have done this is the way that we have goine about it. if you are referring to an Installment Contract then the interest would be noted by way of a caveat under the Property Act.
Richard Taylor
Residential & Commercial Finance Broker
Licensed Financial Planner
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
Hey there,
Second registered mortgage still does not give any 100% assurances that hte vendor will get thier piece of the pie either… if the market slumps and the property loses sales value to a price below the outstanding debt…and the deal goes pear shaped and hte bank forecloses….. the registered 2nd mortgagee gets the crumbs if any AFTER the 1st registered mortgagee has taken all late fees and legals + the total payout figure.A caveat give the holder the right to enter a court hearing and delay proceedings untill thier case has been heard… in other words settlement can take place until the caveat has been lifted. – As far as I know….
WE have worked around solicitors detering thier cleints by just offering a copy of our spotless credit report and letting them know how serious we take this and if it did not work out we go totally in the black book of the bad debters….. lose all our houses …. I mean come on lets be realistic hear…. get them comfortable and they can reject thier solicitors advice and still win in the end … as if any of us want to be on today tonight in hte public eye heading the story of the week “Aussie Diggers Scammed out of thier house”…..
If you have a good system and keep a good eye on things you will find things just fall into place.AS for the 25% baloon payment…. I am not saying it would be impossible … however you need to think of hte vendor and how they would win out of this arrangement…. the more you address thier needs nad find solutions to thier problems… the higher the chance of success. Try not to get to creative first up as it my cause you to stumble and get confused on your own terms thus damaging your credibility as a seasoned investor….
Cheers
Kiwi [baaa]hello Jennifer,
hope the below can help.
we purchased 2 months ago via vendor finance.
purchase price was $200k. we put down $60k, VF $70k and borrowed $70k.
this experience has showed us that good communication and working towards a mutual outcome can always work.
the vendor needed $130k in this instance urgently and so this worked.
VF terms – 8% interest with the first instalment of interest paid on the first anniversary (1 year).
the balance of principle will commence repayment after 2 years.
the vendor has a caveat over the property.
this was all very simple to do and although our solicitor had not done a VF before there was no big hassle.
we had only 2 or 3 sentences in a purchase contract, and it was really simple having the vendors lodge their caveat. none of this held up settlement.
it sounds like the solicitors are making it difficult. try and speak with the vendor direct to discuss your intentions. let them know honestly why you are wanting VF.
all the best.
[thumbsupanim]pete
You must be logged in to reply to this topic. If you don't have an account, you can register here.
