Hi Everyone,
My partner and I would like to buy a house but can not get a loan from a bank so we are looking into Vendor Finance. Firstly, I have somee questions- I have been reading up on this quite a bit but still trying to understand it fully:
We have a deposit, but when it is time to get a loan from a bank would that be classed as refinancing or would we need to save for another deposit?
How long can the term with the vendor go for before we get a bank loan?
Any other info would be good
My story: last year our daughter died, life was on hold for a while, as a result we fell behind in our finances and our credit rating was affected which is why we can’t get a loan from a bank just yet. Before all of this happened our credit rating was great, and since then, we have managed to get on top of our finances, everything is always paid on time. We do have a baby, and really want to buy a house and have a secure home for our family- I hate that where we are now is not secure. We want a 3 bedroom house (we would prefer this but would be ok with villa or townhouse) and are looking at 200-300000 in western Sydney. Please if you can help us, or know someone who can let me know
Thanks!!!
Just realized I posted this in the wrong section…. Sorry
Hi all,
No responses for Cazzie07?
Come on guys, let's help her. I'm bringing this back up the top.
Cazzie, I hope you're still checking in to see the answers.
Angel
Hi Cazzie
Firstly so sorry to hear about the death of your daughter.
Drop Paul Dobson a line as he does a lot of Vendor Finance out of the Newcastle area and i am sure always has investors ready to go. Do a quick search in the Finance sector and you should find Pauls contact details.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Rick Otton does a lot of vendor financing all around Australia. I think his company is called “we buy houses”.
Just note that they will often add 2-3% on the banks interest rates and you will still have to put a deposit down. Plus they add a good deal onto the purchase price so you have to be in it for the long term.
When it comes to refinancing with the banks you can show them your regular payments over time and you can show them how much equity you have in the property. Because you will have a contract based on a certain price they will do a valuation on the property and then whatever it is worth minus whatever you owe will be your equity. Most lenders should take your equity into account so you don’t require a deposit.
Good luck! If you do successfully buy your own home with a vendor finance deal then maybe you could look at selling a home on a vendor finance deal???
Ryan McLean | On Property
http://onproperty.com.au
Email MeHi Cazzie
I'll get to your questions first.
You only need one deposit because as you say, when it comes time to transfer to a traditional loan, it is treated as a refinance. This wan't always the case but we now have a channel into one of the Big 4 that's agreed to treat it as a refinance. A refinance is usually treated more favourably by a lender as the existing loan is "seasoned", i.e. you are able to show your capacity to repay the loan over a number of years.
We write our vendor financed loans over 30 years, to keep the weekly repayments down as low as possible. We find most of our clients refinance into a traditional loan in 2 to 5 years.
A couple of good places to look for vendor financed homes are:
http://www.renttoownhome.com.au &
http://www.vendorfinancedirectory.com.au/
I don't have any interest in these sites, other than advertising on them.Another good spot to track down available vendor financed properties in your area, is to check out the Classified ads in your local community newspaper. Not the glossy real estate section, the Classifieds.
I won't argue with the contention that vendor finance buyers pay a premium for not being able to access a traditional loan at the time of their purchase. However I think emails like the following I received on 28/3/11 tend to overcome this perceived disadvantage:
"In April 2004 I saw a house advertised in the local paper as ‘vendor finance’. Having recently done the divorce settlement thing I was a little cash poor and this looked like an ideal opportunity to get back into my own house with little deposit. Having had little experience of vendor finance arrangements I was a little nervous and did a bit of investigating of the process. No one I spoke to had experience of this either and there were a few voices of gloom advising against this. Nonetheless, I took the plunge and contacted the vendors. Once speaking to Paul and Karen I had no doubt that this was a great opportunity and their honesty and forthrightness immediately alleviated any concerns I had. From the very beginning they were friendly and supportive, providing any information I needed, and much more. At every step in the process they provided that little extra helping hand so that it all went very smoothly.
It has now been seven years since my purchase and I am very happy in my house. Over the years my financial situation has improved and with prompting and support from Paul and Karen I have moved from the vendor finance arrangement to full title ownership (well…me and the bank!). I can wholeheartedly recommend Paul and Karen’s business to anyone in the situation to take advantage of it."
Cheers, PaulPaul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
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