Rules of Vendor Finance?

Looking to purchase a property from my parents using vendor finance. Looking to purchase as interest only and pay bank rates. Parents are in agreement with these terms. Is it possible to write up a Vendor finance agreement like this?
Thanks in advance for any feedback.

 

yes

 

I have done this, in a similar fashion, with my folks.

Some issues here beyond doc prep.

Gotta love the olds who are giving a hand up and not a hand out.

 

It will be a Coded loan so just ensure they are appropriately Licensed as an Installment Contract is a Credit Contract.

 

I haven't looked into this but don't think it would be unless the parents are in the business of providing credit. If that's the case no licence would be needed.

 

Thanks for the replies.
Parents are not in the business of providing credit.

Assuming we just need to have a solicitor write up a contract for us with all our terms and conditions? What would I expect to pay for this service?

 

You should both get some comprehensive legal advice and maybe tax advice too. Prob around $5k all up.

 

Not convinced under RG203

You do NOT need to hold a credit licence if:

(a) you are an authorised credit representative acting on behalf of a licensed principal (unless you are also engaging in credit activities on your own behalf);

(b) you are an employee or director of a licensed principal, or of a related body corporate of a licensed principal, engaging in credit activities on your principal’s behalf;

(c) your credit activities are exempt under the National Credit Act or associated regulations; or

(d) we grant you an exemption from the licensing requirement.

In all other cases you are required to hold a License.

ASIC have recently started to investigate Builders offering 2nd mortgages on their new homes sales where the value and purchase price differ but the borrower still wishes to proceed.

We have started to do a lot of Credit management business for a couple of major national builders.

 

@Mortgage Capital Australia

So, I'd need to have a credit licence for each of the following activities:

• Director's loan to the company
• Company loan to directors
• Spousal loan in lieu of joint mortgagor
• Inter-company loan
• Etc

 

@Scott No Mates - You do not need a License to offer Non Coded loans.

 

This is something Wade will need legal advice on.

 

Precisely.

 

Are you able to provide this service?

 

No not my area of interest. You need a property lawyer.

 

This raises an interesting question in general - if a professional services business says please pay our invoice within 28 days or 10% interest pa applies, is this legal? If so, how? Because the terms of their engagement letter say so and I have agreed to it?

What about other businesses? Can they charge interest on overdue fees?

 

Probably legal if you contacted for that.

 

This has me all confused now?

E.g- If I have 3 properties I want to offer on vendor finance terms (I am the director of my own building company).

Can I proceed to do so on terms- P/I, plus bank fee's charges, rates etc, 10% deposit, plus 3% on weekly bank loan for the trouble?

 

Yes, but you have to think of the consequences.

 

Our lawyer charged $1100 for this type of work.

And that included a face it face meeting.

Admittedly I managed most of it - it is just basic doc prep the lawyer did.

 

Thanks @Terry_w, In regards to the consequences??

Is this in regards to the VF contract? E.g the risks that come with? Like market rise, bad tenants etc? Or would I be actually break a tax or legal obligation?