Last week a colleague and fellow investor called me seeking a mortgage for a property she wanted to purchase in Amherstburg, Ontario, which is just outside of Windsor. As part of her financing, she wanted to include a VTB (Vendor Take Back). A VTB is when the seller offers financing on their own property they are selling. For instance you might have 75% LTV from the lender or bank; a 15% VTB from the seller and 10% from your own funds.
Sellers do this in a tough market, or as an incentive when they can’t sell their property or even to help the buyer when they have a shortfall in funds. Most of all a seller looks for tax deferral as they don’t have to pay capital gains until the portion lent is fully repaid. Continue reading