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

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