What if you could own your own home without stepping inside a bank? Well, it is possible to do just that when you look at alternative property purchasing systems like Vendor Finance.

Purchasing a home makes you a purchaser and the seller is known as the vendor. In general, most buyers don’t have adequate money to buy the property outright and need access to a supplier that can offer finance.  Vendor finance is most commonly used for large scale apartment developments.

Vendors allow finance based on a pre-determined set of terms and conditions which are often stated in the contract for sales agreement. If you use vendor finance the title to the property stays in the vendor’s name until you have made all your repayments and fulfilled your responsibilities under the sale contract. Vendor finance is very similar to a lay-by transaction as you make repayments, except you can live in the property as you continue to make repayments unlike a lay-by where you need to leave the item at the store.

Vendor financiers normally lend up to 80% of the purchase price, although some finance companies will lend up to 90 or 100% if you are willing to take out extra mortgage insurance as well.

When you buy the house your conveyancer or lawyer will place a caveat on the title.  This protects you from the vendor marketing the property or further borrowing against it without your knowledge. Conversely the terms and conditions allow that if you breach your contractual obligations then the vendor financier reserve the right to immediately start legal proceedings and rescind the contract.

Choose your vendor finance deal very carefully before signing anything you may regret later on.

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