In real estate, if you are the one buying the property, you are known as the purchaser and the seller is called the vendor. Most of the time, purchasers do not have the capacity to buy the property outright and need the services of a financial help provider. Vendor finance is an option used for large scale apartment projects. The vendor provides the finance of the property on a pre-agreed set of terms and conditions which are written on the contract of sale. If you choose to use vendor finance to buy a property, the title of the property will be under the vendor’s name until you have made all the repayments and fulfilled all obligations under the sale contract. It is very similar to a lay-away or lay-by transaction mode of payment, but with the extra benefit that you can reside in the property as you continue to pay the monthly payments unlike a lay-by where you have to wait until you are finished with the payments.
Vendor financiers usually allow up to lend 80% of the purchase price, but some finance companies will lend up to 90 or 100% if you are willing to take responsibility of the additional mortgage insurance as well. When you a buy property through vendor financing, your conveyancer or lawyer will place a forewarning on the title to protect you from the vendor selling the property or further have a loan of against it without you knowing it. On the other hand, the terms and conditions also permit that if you violate or commit a breach against your contractual obligations then the vendor financier have the right to immediately start legal proceedings and withdraw the contract. Vendor financing actually allows people without their own house have the home of their dreams in a more affordable and flexible way.