How can I get a vendor financed mortgage?

Any general questions you might have in regards to loans and finance.
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Otto Dargan
Mortgage Specialist
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: How can I get a vendor financed mortgage?

Post by Otto Dargan »

Hi marvelous mike . Welcome to the forum.

Vendor finance is a risky type of finance and isn’t suitable for all. Most of the risks of vendor finance revolve around your ability to afford the mortgage repayments. Vendor finance is a lot more expensive than a standard home loan and here’s why:
  • You’ll pay more to buy a property. You’ll have to pay 10-20% more than what the investor paid for the property.
  • Interest rates are higher compared to other standard loans. In some cases, the rates are at a 1-4% higher than the interest rate the investor paid their bank. So if current interest rates are around 5.00%, expect to pay 6.00% to 9.00% per annum.
  • The vendor holds the upper hand in negotiations. The cost of the purchase and your interest rate will depend on how high of a risk you are to the investor and how quickly you can refinance out of the vendor finance scheme.
Based on your situation and if that is possible, we would highly recommend that you look into a guarantor option. With the support of a guarantor, you can borrow the whole amount required to purchase the property and any cost related to the purchase, i.e. stamp duty legal fees.

Alternatively, you may able to find a lender that can offer you 95% home loan and you come up with the rest in a form of gift or credit facility.

Please call us on 1300 889 743 and one of our specialist mortgage brokers will let you know if you qualify for a loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7730
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: How can I get a vendor financed mortgage?

Post by Otto Dargan »

Hi marvelous mike,

Please note that not everyone will qualify for vendor finance. The main qualifying criteria are:
  • You must have at least 2% of the purchase price as a deposit,
  • You must be able to afford the loan,
  • It’s preferred that you’re buying a house or units in a major city or regional area.
Overall, your situation must be sensible for the lender. If you clearly can’t afford the repayments or you don’t have a good explanation for your poor credit history, then you’re not yet ready to buy a home.

Additionally, vendor finance is an option for you if you have no deposit but, as you can see, there may be other ways to get you approved for a mortgage with no deposit.

Please call us on 1300 889 743 or enquire online to speak to a specialist mortgage broker who can assist you.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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