The example I am going to show you was a real example . The property sold to a rent to own client for $427,000.00 this was a 4 bedroom new property but the principal works the same on old or new. The house was in Windaroo the buyer wanted to borrow 100% of the purchase price and added costs to the loan as they had a small deposit but a solid income.

The repayment was $750 dollars per week with costs added of course the higher the loan amount the higher the repayment. Also the lower the loan amount the lower the repayment.

Lets have a look at this example a portion of the payments you make come off the principle loan amount and that becomes a deposit you can show the bank down the track if you want to refinance . With the Windaroo example it is approx $70 per week after 5 years $18200.00 . This is used as your deposit plus any capital gain in price is also yours to keep .

So for example if the propertys price increased to $480,000.00 after 5 years you purchased it for $427,000.00 payed off $18200 leaving 408,800 with an equity gain of 53,000.00 total equity position $71,200.00 which equates to a 17% deposit you only need 5% to refinance in most cases.

After 5 years if you are not ready we just keep going until you are, your equity keeps going up, either by way of repayments or capital gain or both, so sooner or later you are in the position to refinance if you want to , you do not have to but it works out better for the buyer long term to refinance .

It is a normal real estate transaction you agree to a fixed purchase price, we attach a mortgage (instalment contract) which can go for 30 years until you pay the house off or you can refinance or sell it at any time you like as long as you can cover your balance owing to your mortgage and whatever amount you make above your purchase price is yours to keep tax free.

We help you get the finance by using your repayments as a deposit and using any equity to show the bank . Its your choice to do whatever you like it will be your property.

Plus you get all government grants associated with buying a property that are current at the time, this is the first home owners grant and stamp duty concessions and any cooling off periods required by State or Federal Governments if you change your mind. Of course you can just stay with us but you have options which is the great thing about this type of transaction. A typical exchange when wanting to finance the contract out.

The Broker’s Email

“Hi Paul,
I hope you are well … Just hoping that you may be able to help me, we have received an application from your client in regards to refinancing over to a Traditional Lender. When we have done a Title Search it has the names of “Paul Woolley” . I believe that he obtained the Loan through Vendor Finance, which must be yourself?
Can you possibly advise what needs to be done or documents to ensure that the Clients name will be on Title so the refinance can go through smoothly? If you can please come back to me that would be great …”

Our Response

“Hi Mr Loan Broker
I, sold the property to the client with a vendor finance Instalment Contract. This is a standard QLD, Contract for the Sale of Land, with three additional features, i.e.

1. A 30 year delayed settlement that can be completed any time prior to the end of the term, and

2. An Instalment P&I Payment Schedule that allows the client to pay down, or partially pay down, the purchase price before the Contract completes.

3. Permission to Occupy under licence, while the Contract runs.

The reason I mention this is to show that this transaction is not a traditional refinance due to the fact title does not transfer until the completion of the Sales Contract . Getting a loan from a traditional lender will in effect complete the sales contract and will require a conveyance and this is when title transfer will happen.