Vendor Take Back Mortgages (Risks)


I am a Listing agent and was I was asked about a Vendor –take-back mortgage (VTB) by a Buyer’s agent . Have t done one of those in eons. Please tell me the disadvantages of a seller giving a small second as a VTB. The 8% is the only benefit?


The risk is that there might not really be any equity in the property behind them. if the market goes down, this would be an increased risk. Can your Seller maintain the payments of the first to keep it afloat long enough to sell the property himself under Power of Sale (POS)?

The advantage is selling the house. The Buyer may have exhausted all other methods of financing. So, this gets the house sold.

Typically, lower interest rates than regular seconds, fewer payments, perhaps interest only.

You have to make sure that there is a cap on the principal outstanding on the first.

Brian Madigan LL.B., Broker

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