What’s Vendor Finance?

Types of Vendor Finance

Purchasing a home is a very exciting time in the life of anybody who is taking a major step towards owning their own property and building their future. There are two main systems of selling/buying property on vendor finance. They both help you achieve your goal of buying your own home but operate in different ways.

Rent to Buy

One that you have probably heard of that is very common is called a Rent to Own/Rent to Buy/Rent Purchase Agreement. There may be other terms used in the marketplace to describe the style of Vendor Finance but they are basically all the same thing and come down to the use of two forms of legal paperwork called a Lease and an Option. The Lease gives you the right to live in the property and the Option gives you the right to purchase the property. For more information about what a Lease Option is and how it works please click on the Rent to Buy tab

Instalment Contract

The second formal paperwork that is commonly used is called an Instalment Contract. An instalment contract is also made up of two pieces of legal paperwork but unlike a Rent to Buy is actually a contract to purchase. The contract is simply a standard contract of sale for your state. The other part of paperwork that is added to this is a loan agreement for the amount owing after you pay your deposit. For more information about an Instalment Contract and how it works please click on the Instalment Contract tab

These two forms of paperwork are very different but do achieve the same end result when set up properly by your vendor finance seller.