Land still tough to finance

Land banking, land development, land servicing all continue to be tough deals to get financing for. Banks and lenders are happy to lend you the money if you have enough pre-sales (of completed lots) to cover up to 100% of their loan. Private lenders have too much land sitting in their portfolio and don’t have an appetite for anymore. Continue reading “Land still tough to finance”

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 dylan@bridgecap.ca or visit www.bridgecap.ca/dylan