Hi everyone,
I am madly looking for my first property.
Im looking for a stratagy to make positive cashflows.
Found plenty of nearlys.
Read something briefly in Steves books about 2nd Morgages over one property?
eg. $100,000 property
pay $80,000 and have a 2nd morgage over the remainding $20,000 paying interest only to the vendor then pay out in say 5 years.Does anyone know please where I could find more information about this option or if you could explain to me how it works.
Much appreciated
Kind RegardsPaula
Hi Puala,
What you are suggesting here is Vendor Finance I think.
The bank lends you $80K under a first mortage, and you seek the vendor to provide finance for the remainding $20K over what ever term you agree on.
Vendor finance would cost more perhaps about 2 percent above bank rates.
By financing the property this way would save on Mortage Insurance.
If you have equity in other property you may be able to get a loan for the total amount, or about 106% to cover all costs.
Hope this helps.
hrm
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