Do banks like vendor finance

no, they don't like it. You may even be breaching the conditions of your mortgage agreement if you sell on vendor terms.

If you just want to sell and will offer to fund the purchaser's deposit then the banks don't really like this either, but the problem will lie with the purchaser.

Hi Ironlady

Terry is correct in what he says.  It's also interesting to note that your mortgage documents probably also preclude you from renting your property, without getting your lender's authority.  And guess how many other Aussie's are breaching their mortgage documents by doing certain renovations to the property without lender authority.

The banks seem to be in two minds about their feelings towards vendor finance.  I know a number of vendor financiers that have got multi million dollar lines of credit from two of the "4 majors" to run their residential real estate, vendor finance businesses.  And these lines of credit were given in the full knowledge that the properties bought with these LOC's were going to be on-sold with Instalment Contracts.

Ultimately it's your decision and following are some information sources for the two most popular vendor finance strategies:

1.  Instalment Contracts:
http://www.vendorfinancelawyer.com.au/instalment_contracts.htm
https://www.propertyinvesting.com/strategies/wraps

2.  Lease/Options:    
http://www.vendorfinancelawyer.com.au/rent_to_own.htm
https://www.propertyinvesting.com/strategies/lease-options

A great general overview of vendor finance in Australia is available at:
http://www.vendorfinancelawyer.com.au/vendor_finance_intro.htm

As you mention leasing the property, it may be worthwhile thinking about selling the property with a Lease/Option.  As it's a commercial property, you won't be under the control of the Residential Tenancy Act for the "Lease" part of it (a real bonus).  Selling your commercail property with a Lease/Option has the real potential to get you a premium rent that should give you excellent positive cash flow.

Cheers,  Paul

Hi Ironlady

All you are doing here is Leasing the property.  Would you normally ask the bank for permission to  rent it?  Probably not.

Then, just between you and the new tenant, you give them an Option to buy the place for a fixed price within a certain number of years.  This gives them the option, but not the obligation, to buy at this price at anytime during the term of the Option.

In return for this Option the tenant pays you a premium rent.  Probably enough to cover all your costs on the property, plus some positive cash flow.  You may even credit some of their premium rent towards the tenants deposit on the property, if they buy during the term of the Option.  It's incredibly flexible and can be written up on the basis of what you both agree.

I'd expect that getting the Commercial Lease drawn up, with an associated Option, will cost you somewhere around $1,000 to $1,200.  We, of course, pass these costs onto the buyer.

Cheers,  Paul