Vendor Finance vs CreditCrunch

Just curious and wondering electronically.:)

Does anyone else think the residential markets will see more vendor finance deals as a consequence of banks stricter approach to lending?

The flow of readily available credit slows down because the banks have tightened their lending criteria, No docs and Low doc loans are a dying breed. Banks are returning to their core business (lower risk lending).
 
Probably not. Reasons:

1. Most people don't even know what vendor finance is.
2. Most people selling now are not in a position to carry a vendor finance because if they are still trying to sell now despite all the media reports, they would need the ALL the money NOW.
 
hi aaarghhh
simple answer is yes
the vendour finance can and is negotiated with the banks or lenders and there is alot around and yes there will be more.
I am currently doing what I call a layby vendor finance and its a form of vanilla finance.
so ts very simple and does work
we buy the property in one line
and then we have buyers that buy the property from us as a forward order
we fix the loan for 5 years
and the incoming buyer buys the property from us with a fixed price and deposit of 10% of the current market value.
we hold ownership of the property and cover the interest for the 5 years.
the buyer can pay anything they want into the loanfor the 5 years and
then after 5 years the property is revalued and any growth we split 50/50.
this is relatively high end stuff.
and because of the structure of our loan system each unit is positive and is cbd and this is true vendor finance back.
we are in this case the vendor/buyer/ and funder
which is nice
and as the buyer (the only requirement for our buyers) is that you have to have a clean CRA as there is no other input for the 5 years from them.
we are moving into construction on the same basis and have a couple of site under negotiation at the moment
so in answer will it become more popular
it is becomming so.
current max input is 49k for one area and 120k for another
 
I assum u mean Wrap mortgage, rather than a part deposit financed by vendor.

These work mainly be the seller securing a reasonable form of back loan which can then be piggy backed to the new buyer with an extra rate margin.

On a one or few off basis Id say its tougher than its ever been.

If you are in that business, running deals through the commercial or business parts of lenders then, id suspect, while still harder would still be doable.

ta
rolf
 
hi rolf
ours is a option to buy and we fund the deal.
as we become the vendor once we purchase the end buyer buys and option and then buy the property at an advance point in time.
and tehy are positive from day one.
not sure if its a wrap as I don't do wraps at this stage for us its an option to purchase and for taht option a deposit is paid as is the case with any option.
our funder then fund us and the end purchasers buy off us.
 
This scenario probably helps in the current environment where valuations are coming back lower in certain areas, especially with house and land in Melb's north.

So which banks are are best for developers to approach?
What sort of contracts are required for purchasers?

I am about to assist a developer with a few projects in Melb and we spoke about vendor finance so at this stage if you can supply further information id be very grateful :D
 
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