Owner Financing in Canada
Are you looking to buy a house but feel you may not qualify for a mortgage through a conventional method; well this article may be just what you need to buy your home or investment property.
What is Owner Financing in Canada a.k.a (vendor take back)? Owner Financing in Canada is when the seller agrees to finance the deal as if he is the bank, it is a win- win situation both for the seller and the buyer. There are many benefits for both parties, if you are the buyer, you do not need to worry abut qualifying for a mortgage, you do not have to worry about a credit check (especially if you have credit issues), you can have a long term mortgage, more flexibilities with closing dates and more.
You can negotiate what percentage of the value the seller is willing to finance, it could be 30-70% in which case you will still need to obtain and qualify for a mortgage for the balance of the value of the purchase price, but on the other hand the seller could also be willing to finance 100% of the value, in which case you make your monthly payments directly to the seller.Owner Financing in Canada works well when banks and lenders have strict lending policies.
What’s in it for the seller you may ask? He can sell his property much faster, he does not need to wait for the buyer to get approved for financing; he can get the full asking price without discounting the price, he can set the closing date according to his future plans, he will also have more time to pay less tax.
If for any reason the home buyer defaults, the seller’s collateral and security is the house, which means if the buyers fails to make his monthly payments on time to the seller, the seller, like the bank, has the authority to take over the house, and the buyer will lose all the money he put into the property.
Owner Financing in Canada is a win-win situation, the seller is happy that he sold his house fast and the buyer is happy that he did not have to go through all the hassles of conventional financing. The best deals are when both parties come out winners.
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The above information is provided as a guideline and is not intended to give a professional legal advice. Please consult a real estate lawyer for their opinion on your particular case
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