leaving money in the deal.... - PropertyInvesting.com

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Tools
Participant
@tools
Join Date: 2003
Post Count: 363
January 27, 2005 - 9:29 am
Hi guys,
I have read numerous posts about a vendor leaving money in the deal.How do the mechanics of that work?I am selling a property and the buyer is $10,000 short in funding.If I left $10,000 in,how do I do that,and how do I get it back?
Thanks
tools
Mortgageman
Participant
@mortgageman
Join Date: 2004
Post Count: 164
January 27, 2005 - 11:11 am
Tools,
You lend them the extra money and secure it by way of a second mortgage. The problem will be in finding a lender to fund your buyer who will allow this as it is a form of vendor finance, which most lenders do not like.
Mortgageman
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
January 27, 2005 - 1:20 pm
You will need to talk to your solicitor about this, mortgage documents will have to be drawn up. You need to decide on the term, the method of their loan (IO, PO, PI or a balloon payment etc), and the interest rate.
I have spoken to a few lenders about this, and they have expressed that they have no problems with it, but I have never see it done with a registered second mortgage (ie the first mortgage holder would have to give their permission for a second mortgage.)
Terryw
Discover Home Loans
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North Sydney
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woodsman
Member
@woodsman
Join Date: 2004
Post Count: 714
January 27, 2005 - 1:35 pm
A caveat could be placed on title to protect your interests (in addition to the contract between yourself and the purchaser), as many banks do not give permission for registered 2nd mortgages.