Vendor Finance Option

[xcesiv]

1 little problem i have is proving i have the cash flow & affordability.

I am looking at living with family for 12 more months after i purchase this 3rd IP and then making the IP my PPOR.

With me being honest with the banks with my goals with this IP the 3 banks i have talked to have assessed my affordability on no income for the first 12 months of me owning the IP. They said as its only a short term IP they need to access it as if i can afford it outright. incase no rental income is to come in in this short term.

Now. With my own math i can easily afford more, I work full time and I run my own small business part time for over 12 months now as a 2nd income, the 3 banks have all said that because its still fairly new and not steady income they dont wanna use this income in there math either.

The small business has been a good way to remove alot of personal expenses so my personal expenses. 100% mobile Phone, 70% Transport Expenses (30% is my 2nd car i own for private use), 50% electricity, computer, internet, etc all paid by my small business and i plan to charge my company a portion for leasing the office.

But all of this is not considered by the banks with my affordability. They dont wanna hear about it.

So my biggest issue is trying to get the place i want to get, with a loan from the bank for a decent amount less.

1 option i have been reading is using vendor finance to bridge the gap between what the banks will lend me and the difference.

The banks are saying if i pay all the fees and stamps (which i can do), etc i can borrow $300k with no extra injection of funds.

I would like to increase this to closer to $350k and get something nicer as i wanna make this my PPOR.

I would be looking at Vendor Finance of say $50k over 2-4 years at a X % or a fixed extra cash amount.

my questions are

1) What are the Banks View on part Vendor Finance on a property

2) Would this effect the amount the banks allow me to borrow

3) Are there any other areas i should be concerned about or looking into to make something like this work

4) Is there any other suggestions other then vendor finance i should look into

Thanks

Warren

 

[rugrat]

Without wanting to suggest you should act in anyway that might be considered fraudulent, 12months is a long time, why do you need to tell them that you plan on turning the IP into a PPOR in that time?? Will they lend you the money if your weren't?

 

[Peter_Tersteeg]

Most lenders simply won't consider vendor finance. Most vendors will want to place a second mortgage on the property and the bigger lenders won't authorize this.

There are some smaller lenders who have been willing to do this, but the rates are a little higher than normal. You'll also need a 20% deposit minimum.

There are plenty of alternatives to the larger banks, many of whom have more cost effective products. Lending policies, whilst not any better or worse, can be different and thus might suit your circumstances better.

Call a broker to get easer access to multiple options.

 

[marg4000]

I would think that to rely on vendor finance would severely restrict the properties available for you to buy.

Most people who sell do so because they need the money, either for another property or another purpose.
Marg

 

[markp]

Banks are only interested in income. Vendor finance could be an option. But a broker would give you more options especially if you have a company?