Paying out vendor financing

Often borrowers will purchase a property and not have enough down payment or may not be able to qualify for a mortgage at the time of purchase. A vendor looking to sell a property may offer a mortgage to the purchaser to help them purchase the property. For example, a property is being sold by a vendor for $750,000 and the purchaser is not able to qualify for a mortgage from a bank or lender but has $250,000 as a down payment. The vendor may agree to sell the property to the purchaser, take the $250,000 down payment and then offer a 1 year mortgage of $500,000 to the purchaser. The purchaser would make monthly payments on the mortgage and would have 1 year to work with a bank or lender to refinance or payout the $500,000 mortgage placed on title by the vendor.

Recently we have seen some transactions where a client is now at the end of their mortgage term with a vendor and needs to seek replacement financing. Most clients will take a mortgage from a vendor because they cannot qualify with a bank or lender or because a bank or lender does not want to finance the property type. Land transactions completed in the past two (2) years often involve a vendor mortgage and we are seeing these transactions that now require replacement financing.

If you have a vendor mortgage or have questions about how vendor financing works for real estate, please do not hesitate to email or visit

CASE STUDY: Construction complete on an infill

A small home builder approached us to replace the financing that he used to construct two infill properties that are now listed for sale. The construction mortgages were interest only
payments and open for repayment at anytime without penalty. The properties are going to be listed for sale and given the amount of equity the builder has in both properties we arranged no income qualifying 1 year open mortgages that will allow him to sell the properties and repay the replacement mortgages with no penalty. The interest rates on the replacement mortgages are very competitive and the fees were less than 1.0%.

Construction financing has been hard to find over the past several years however recently lenders are coming forward to offer construction financing to strong borrower who can demonstrate real equity and personal net worth. Once construction is completed, mortgages can now be put in place with a growing list of lenders who are comfortable lending to a certain percentage of value and loan size.

If you have a construction mortgage that you would like us to review, please email or visit