A two-bedroom home with a big backyard. A modern studio apartment in the city. A two-storey house in a quiet suburb. House hunting can be very exciting because you’re essentially shopping for your future home. Only one thing can put a wrench in this plan: your finances.
Buying a home is a huge investment and so most people tend to wait years before they even start to look at properties. Even with the government offering help to first time home buyers with grants, most people still have to deal with stringent requirements of banks to obtain a loan. But did you know that by looking into vendor finance, you could start to fulfill your dream of owning property today?
In vendor finance transactions, the owner of the property basically provides financing to the buyer instead of accepting payment from a bank or mortgage lender. The goal of vendor finance is to facilitate a sale, which is very good news not just for the buyer but the seller as well. The buyer doesn’t need to go through the stressful and lengthy process of qualifying for a bank loan while the seller can increase the number of potential buyers – even during a lull in the property market.
Even if you have a negative credit history or if you’re waiting to clear your credit record, you’ll still have a chance to purchase property through vendor financing. The most critical factor to qualifying for this financing is showing capability of making the weekly payments on the home. The weekly amount may be similar to what you might pay for your weekly rent, which varies with the location.
Much like rent to own homes, wherein you may get an option to buy the home after a certain agreed upon period, the terms for vendor financing may be flexible. You can negotiate a realistic payment plan with the owner or the seller, which would be helpful if you suddenly encounter payment difficulties.
The best part about vendor financing is that you don’t have to come up with a considerable amount for a down payment. The owner or the seller may only require an upfront deposit; the amount could be between three to five percent of the contract price.
Finally, much like the rent to buy homes, you can move into your first home as soon as an agreement has been settled and your deposit has been paid. Click here to know more.