How to Buy a house for $1 - Wrapping / Vendor Financing

[M1zz]

1. With instalment contracts tittle only passes on completion. Vendor keeps their mortgage until completion too. Think of a normal settlement as being 42 days, an instalment contract just blows this 42 days into 30 years and allows you to live in the property until completion.
2. Never heard of this before. What do you mean by “buy off the debt”
3. Could you please elaborate on this? Transportability of a loan means you can take the loan with you if you sell a property, ie just substitute your security/collateral.
4. Taking over a mortgage? Any lender would surely want to make sure you as the new borrower could afford the repayments. Substitution of collateral would mean changing the security for the loan, ie changing the property.
5. As per normal. Trustee of the trust enters into contracts.

Thanks for the insight Terry,

regarding Q.2, I actually phoned Rick's office and they explained it a bit better, essentially after 1-2 years after the deal is done, you can offer the buyer to add value to the property and refinance in order to "buy me out" and own the property.

Regarding Q.3, it is still a mystery to me to be completely honest. I think it's related to the fact that me as the "mediator" of the deal, shift the responsibility of making repayments towards the seller's mortgage.

Thanks again,
D.

 

[Lofty]

Hi Mizz

We look forward to seeing you at the Melbourne VFA meeting Thursday next week, i.e. 7th. I've also put you on the distribution list of our vendor finance newsletter called VFI News. However if you'd like to read the VFI News archive it's at: https://vendorfinanceinstitute.com.au/home/?cat=19

Regarding question 2 above, yes with just about every vendor finance transaction I've seen, the purchaser can buy the vendor out at any time. That's why I suggest in our newsletter that it's just as important to do proper due diligence on your seller as your buyer. That's because, if you are doing a JV with a Seller, to sell their property with vendor finance (VF), the Seller has to always be in a position to provide free and clear Title at any time the buyer wants to 'complete' the contract, i.e. buy you out.

Of course, the buyer adding value to the property is likely to help them 'buy you out' sooner.

Question 3 to me looks like a reference to a VF buyer 'trading up', i.e. where a VF buyer takes the equity they have in their current property into a new vendor finance transaction on a 'nicer' home, i.e. trading up. It happens quite often and can be seen as making the Instalment Contract 'portable'.

As you are in Victoria I'd recommend Lewis O'Brien as the solicitor to talk with regarding the legal paperwork for VF transaction. Lewis' contact details are:
Lewis O’Brien & Associates
Suite 113
89 High Street
Kew Victoria 3101
phone: 03 9888 6388

Cheers, Paul

 

[M1zz]

Hi Mizz

We look forward to seeing you at the Melbourne VFA meeting Thursday next week, i.e. 7th. I've also put you on the distribution list of our vendor finance newsletter called VFI News. However if you'd like to read the VFI News archive it's at: https://vendorfinanceinstitute.com.au/home/?cat=19

Regarding question 2 above, yes with just about every vendor finance transaction I've seen, the purchaser can buy the vendor out at any time. That's why I suggest in our newsletter that it's just as important to do proper due diligence on your seller as your buyer. That's because, if you are doing a JV with a Seller, to sell their property with vendor finance (VF), the Seller has to always be in a position to provide free and clear Title at any time the buyer wants to 'complete' the contract, i.e. buy you out.

Of course, the buyer adding value to the property is likely to help them 'buy you out' sooner.

Question 3 to me looks like a reference to a VF buyer 'trading up', i.e. where a VF buyer takes the equity they have in their current property into a new vendor finance transaction on a 'nicer' home, i.e. trading up. It happens quite often and can be seen as making the Instalment Contract 'portable'.

As you are in Victoria I'd recommend Lewis O'Brien as the solicitor to talk with regarding the legal paperwork for VF transaction. Lewis' contact details are:
Lewis O’Brien & Associates
Suite 113
89 High Street
Kew Victoria 3101
phone: 03 9888 6388

Cheers, Paul

Thanks Paul for the useful insights, much appreciated.