Hi Everyone
My first time here so please excuse any errors of etiquette.
I had an enquiry yesterday on a property I have for sale at $700,000. The potential purchaser asked would I consider vendor finance on $200,00 of the purchase price. I know very little about providing vendor finance and need to know the possible downfalls from the vendors perspective.
I'd love to hear from anyone that's done this kind of deal. I currently have approximately $480k equity in the property, so owe around $220k. How does one set this up – would I be best off using a solicitor, accountant or both, assuming that I decide to proceed of course?
Thanks in advance for any responses.
Regards
C.Hi Cherylea
For the purposes of my response I shall assume that the potential purchaser was seeking a 2nd mortgage carry back.
In a nutshell on settlement the purchaser would front up and give you $500,000 and you would hold a 2nd mortgage against the property of the 200K.
In turn you would charge an interest rate on the $200K which would be payable by either interest only or principal & interest installments over a given period of time.
On the downside you have to wait for the balance of your money although would be earning a commercial rate at the same time. Make sure your Solicitor draws up the 2nd mortgage at the buyers expense and If you are ok with the delayed payment then all is sweet.
Richard Taylor | Australia's leading private lender
Thank you very much Richard – it's certainly given me a lot to think about. Your advice is appreciated.
Regards
C.
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