Why Do Vendor Finance?

why do vendor finance

Some of the banks these days require 30% Deposit for a home loan. This is a huge amount of money that some people do not have. As you the Wrapper (Vendor Financer) can ask for a lot less deposit to help the Wrappee (Home Purchaser) purchase a home from you. This is a win-win.

WARNING! Do Not WRAP a House Unless You Can Afford to Pay that First Mortgage

Can I Afford to Purchase a Home For Positive Cash Flow? The first essential is for me to do my mathematics.

CASE 1 - have this hidden and opt in via email to get it.

The asking price for the house is $195,000 which is about market value. I will not spend more than $182,000 to buy it – $13,000 less than the asking price. I have a deposit of 20% which is $36,400. I need to make provision for Stamp Duty and legal fees which I need in addition to the deposit to make the purchase. I will allow 4% which is $7,280. The Lending Institution will give me a loan at 9.5% over 30 years. I need to borrow $145,600.

This will cost me $1,224.28 per month or $282.74 per week. I am going to on-sell this property for $212,000 non-negotiable, $30,000 more than my purchase price. *I am asking for a MINIMUM deposit of $10,000. First home owners grant (FHOG) is currently $7,000 – so the WRAPPEE must have a minimum of $3,000 in cash which is the deposit.

So they will take a mortgage with me for $202,000. I will ‘fi x’ my interest rate with my financial institution for 2 years.I am charging 11.5 % interest per annum over 30 years.

The WRAPPEE will therefore need to make instalment payments to me of $2,000.38 per month or $461.98 per week.

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To Your Success
Paul Zalitis
The Aussie Wrapper