Hi,
we have found buyers for our property. They will take a loan from a back and we are offering them vendor carry back to help them as they are self-employed/business owners.
This is a new area for me so I am wondering what other people who have successfully sold a property offering vendor carry back have done.
1. What sort of interest rate have you asked for (we are not looking to squeeze them – we are happy to sell a property that has been hard to sell) and gain from the reduced mortgage load we are currently carrying.
2. Did you become 2nd mortgagee or have it unsecured? What did the primary lender think of that?
I probably have lots of questions so any info would be great!
Thanks Cherie
Ideally you should secure you loan to them. But if you do this then they may not be able to get finance as no lender would want to lend to them. Another option is to lodge the second mortgage after settlement.
Interest rate can vary depending on how good a deal htey are getting. Nil to 15% maybe.
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
Hi Cherie,
re interest rate there are different schools about that. I found 1% above market or 2% about market rate to be quite popular.
re your secuirty: i would recommend to discuss that with your solicitor. I found that many people have a caveat as security and a unregistered second mortgage. the primary lender shouldn't be concerned, since they have the 1st mortgage. hope that thelps.
Hi Cherie
Just be aware that second mortgage security is pretty ordinary, especially if your buyers first mortgage is already at a high LVR. That's why second mortgages are so expensive out the in the commercial world, i.e. the people who do this type of lending on a regular basis know the extra risk involved and charge accordingly. In our vendor finance transactions we try to ensure that the second mortgage money we lend is only profit, i.e. if it defaults we're only losing some of the profit.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
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