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TERMINOLOGY
The seller of a property can offer a buyer a vendor mortgage, if the buyer is unable to obtain a conventional loan for the full purchase price. The seller, or vendor, finances the purchase in order for the sale to go through. You may be able to get a lower interest rate from the seller if they are in a hurry to move the property. Make sure you are satisfied with the loan terms offered by the seller and protect yourself against a bad mortgage.
Vendor First Mortgage
If you are buying a home and you are unable to get a loan from a traditional lender, the seller can give you a loan for the purchase price to help you buy. The seller would be your mortgage holder, and you would repay them as outlined in the loan agreement. You will be required to make a down payment to the seller.
Vendor Second Mortgage
If you are only able to obtain partial financing from a mortgage lender, the seller can offer you a second mortgage for the remainder of the purchase price. You will have to let the mortgage lender know you want to use a second mortgage because they must agree to it in their loan terms.
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