Home News Understanding seller financing in home loans

Understanding seller financing in home loans

Font size :
Buying a home is made more possible with the help of seller financing. Home buyers would usually resort to seller financing if their credit history is less than favourable because of lack of collateral among other factors. This makes them ineligible for a conventional bank-financed mortgage.

Under this kind of financing, the seller would shoulder a portion of the home loan. The buyer would then come to terms with the seller in paying back the loan with interest.

Sellers may charge steep interest rates to finance a home loan. There is no cap to the interest rates sellers may charge and no outside authority governs this kind of loan. Sellers acting as lenders may not always guarantee the best deal for a buyer. Seller financing comes with its own set of risks but it does provide a line for buyers to afford a home loan that banks may otherwise not grant them.

However, under seller financing, a buyer would not be getting any equity or the property deed until they have fully settled the loan from the seller. Sellers may even opt to evict a buyer from a property if the buyer misses so much as a payment to the loan.

It would do well for the buyer to go through a seller-financed transaction thoroughly. The buyer should understand modified payment plans as well as the contract for deed purchase agreements. This would ensure that the buyer would not get evicted later on and lose all the payments he made to the seller.

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Mortgage News and Articles

House prices return to more affordable levels in mining towns House prices return to more affordable levels in mining towns

While the end of the mining boom caused property prices to collapse, on the plus side, homes are more affordable again Read more

Borrowers should anticipate a possible rate hike Borrowers should anticipate a possible rate hike Some experts advise borrowers to look for a fixed loan that allows extra repayments so that they can whittle down the balance sooner ... Read more

Why choosing the right mortgage is hard for first-home buyers Why choosing the right mortgage is hard for first-home buyers Many feel overwhelmed by the sheer range of products and interest rates on offer, a new survey reveals ... Read more

Mortgage applications drop in second quarter Mortgage applications drop in second quarter This marks the “beginning” of a downward trend, says Equifax executive ... Read more

More mortgage news and articles

Sponsored Links

Wednesday, Jul 26, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Whether you're a first homebuyer, looking to refinance, or investing, it's important to have the right loan for your needs. Just fill in a few details below and one of our trusted mortgage advisers will contact you.

A quick & easy way to find the right home loan
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords