Vendor Finance – how it works

Good morning all,
I am considering trying, or at least looking at Vendor Finance, but to be honest I have no idea how it works!

I am thinking that the owner (Vendore) who wants to sell thier property for $250K (example only) might keep $50K and I pay them (and therefore get finance for) $200K. Now the $200K I’d get from a bank, but what happens with the $50K? Do I:

• 1. pay the vendore instalments, based on a private contract/ agreement on a monthly/ weekly instalments;
• 2. delay the payment of the $50k for a specified time frame, allowing me to make use of potential equity that is to come;
• 3. Wait until I refinance for the whole lot, as the finance would be, hopefully, only a max of three months away?
• 4. What???

This could be a good strategy for me as it could well be that I will refinance in the near future with a separate Lender, but initially I’d need to purchase the property using, say the CBA or the like. Keep in mind that I live in a mining Town, with transient population!

How often is vendore finance done in WA – if any-one knows? Are there any other legal requirements that I need to consider (ie: does one of the parties need to hold a lenders license, etc)?

Look forward to your replies!

Cheers

C@34