Does anyone here have experience doing seller cash back mortgages? For instance, let’s say a vendor is selling a property for $100,000. Instead of offering $80,000, I offer the full $100,000 with $20,000 cash back after closing. The reason for this is to secure my total financing from two private lenders, one of which will only give me 80% of the purchase price. The other 20% down will be from a high-interest rate lender to cover the down payment, to be repaid after closing. Has anyone done this type of transaction?
Seller Cash Back?
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QUOTE (Gen1GT @ Jan 26 2010, 06:31 AM) Does anyone here have experience doing seller cash back mortgages? For instance, let`s say a vendor is selling a property for $100,000. Instead of offering $80,000, I offer the full $100,000 with $20,000 cash back after closing. The reason for this is to secure my total financing from two private lenders, one of which will only give me 80% of the purchase price. The other 20% down will be from a high-interest rate lender to cover the down payment, to be repaid after closing. Has anyone done this type of transaction?
You can the vendor to "abate" $20,000. Sometimes it is done for the purpose of renovations. You will need to have your lawyer to give you a precise "abatement" clause language, which needs to be included in the offer. Hopefully, the lender who gives you 80% of the purchase price will be fine with that. The banks or CMHC tend to pick on it.
You can the vendor to "abate" $20,000. Sometimes it is done for the purpose of renovations. You will need to have your lawyer to give you a precise "abatement" clause language, which needs to be included in the offer. Hopefully, the lender who gives you 80% of the purchase price will be fine with that. The banks or CMHC tend to pick on it.
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QUOTE (OlegP @ Jan 26 2010, 11:01 PM) .. The banks or CMHC tend to pick on it.
meaning they will not lend on 100K but only on 80K ..
you can also pre-pay taxes or condo fees.
All legit IF DISCLOSED.
Frequently done without disclosure or with a 2nd, undisclosed, side-agreement. ALso referred to as mortgage fraud.
Disclosure, please !!
meaning they will not lend on 100K but only on 80K ..
you can also pre-pay taxes or condo fees.
All legit IF DISCLOSED.
Frequently done without disclosure or with a 2nd, undisclosed, side-agreement. ALso referred to as mortgage fraud.
Disclosure, please !!
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QUOTE (Gen1GT @ Jan 27 2010, 06:05 AM) How much more liberty does one have in how creative your terms are if you have private funding?
lots of liberty .. shy of the Canadian usury laws of 60%/year
lots of liberty .. shy of the Canadian usury laws of 60%/year
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QUOTE (Gen1GT @ Jan 29 2010, 06:24 AM) I`m not understanding that term, Thomas. What are the Canadian usury laws of 60%/year?
Usury is a legal term. Its against the law in Canada to charge interest at a rate of greater than 60% per year. So with a private mortgage, you can negotiate any terms that both sides agree to, but the interest rate can`t be greater than 60%.
Michael
Usury is a legal term. Its against the law in Canada to charge interest at a rate of greater than 60% per year. So with a private mortgage, you can negotiate any terms that both sides agree to, but the interest rate can`t be greater than 60%.
Michael
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QUOTE (Gen1GT @ Jan 29 2010, 10:34 AM) So if you can negotiate any deal both sides agree to, why do you hear so much of, "you can`t do that!" in the business? Ignorance perhaps?
Big difference between private financing and financing with a financial institution or insured with CMHC.
Big difference between private financing and financing with a financial institution or insured with CMHC.