I have posted some questions relating to offering part vendor financing as an incentive to buy my property say 30 % . hoping someone with experience or knowledge of how to do this successfully would be able to offer some advice.
I don’t seem to have attracted any comments .
Am I in uncharted waters or have I posted it in the wrong place.
The archives on wraps and vendor finance is locked and there appears to be limited new discussion. Why ?
I have also tried to contact the wraps asn with no response . Is there a contact for a WA branch available.
Thanks for your help.
Cheers,
GregAll you have to do is to let the agent know and start advertising the fact that you, the vendor, will leave 30% in the deal – or lend the purchaser 30% and the terms. eg IO over 5 years at 10% etc.
Discuss with your solicitor who will prepare a second mortgage to be lodged over the property once it settles.
Hopefully as the property grows, it the new owner will be able to increase their loan and pay you out.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for your help Terry.
Have you done this yourself ?
What can go wrong ?
Do I have to keep records and issue statements etc like a wrap ?
What rights or obligations would I have ?
Cheers ,
GregHi Greg
I haven’t done this myself, only have theoretical knowledge!!
I suppose, the worst thing tha can go wrong is they stop paying your loan. In that case, you have a second mortgage so your fairly secure – if the values were as expected. You can take legal action to get your money back, and in the end could probably foreclose on them. But I don’t know what would happen if the kept paying the main loan, the first mortgage and not yours. Maybe you would have to get the first mortgage holder’s agreement to foreclose.
If the loan is for personal purposes and not business/investment, then the loan would be regulated by the UCCC (uniform consumer credit code) and you would have to abide by all the regulations such as issuing statements at certain interevals. If it is not regulated, then probably you don’t have to issue statements, but if it is interest only, it will be easy to do anyway. You better talk to a solicitor about all of this.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry,
I’m waiting for a solicitor to call me back.
I,m still puzzled that no one with any experience has anything to say.
It would be nice to have the help of experience .
Anyway I’m on a learning curve to solve my selling problem.
Cheers,
GregHi Greg
Also haven’t done it personally. Was involved in a contract where the vendor was prepared to leave $100K in the deal. It never eventuated.
I’ll check in our office if anyone has done it.Can I be so bold as to ask why you need to leave 30% in the property? I know you mentioned “incentive” What’s wrong with the property that you feel you need to do this?
Cheers
Chad
Chad ,
Nothing wrong with property .Got interested people but with low deposits available and banks blanket criteria on small properties is only about 60% LVR means I have to wait till I find a cashed up buyer or do part vendor finance.
holding cost plus possible extra cashflow from the bit I leave in makes me think it may be better to do this.
Cheers ,
GregDont ask me im a south australian and we cant do that ere
[baaa]
Spewin chips[buz2]
Hi Greg
Understandable. haven’t yet got the answers to assist – hang in there.
Chad
Hi Greg
Had a chat with a Real Estate Principal who has done this for clients and the answer is that you would be the 2nd mortgagee. The 1st mortgagee, being the bank, normally has all rights to their interest in the property until they are paid.
So, as I understand it, if the buyer continued to pay the bank but not you, you can’t access the property, you would need other securities like other assets or business interests he/she has.
If the bank takes possession and auctions the property off because the buyer defaulted, they would recover their debt 1st, then if anything left the 2nd mortgagee (you) would recover yours. etc
You can have 2 or 3 or 4 mortgagees on a property.
Best to get legal council though and get it from the horses mouth.
Cheers
Chad
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