Vendor take back mortgage or promissory note?

[Michael K.]

Hi Everyone,

I’m planning to purchase a duplex through a private sale from a very good family friend.  The seller and I have already discussed the terms which is basically a lump sum down payment plus monthly payments for the next 20 years, which is paid directly to the seller.  I will not be getting a mortgage from a bank to finance the property.  Now my question is whether my lawyer should setup this transaction as either a VTB mortgage or with a promissory note upon closing.  My plan is to refinance and renovate the property next year so this is where I need help.  Will a VTB mortgage registered on the property title hinder my ability to refinance in the future as banks will see the terms of the VTB mortgage and effectively impact my debt servicing ratios?  From my understanding of promissory notes, these are typically not registered on the property title, so likely wouldn’t hinder my refinancing ability in the future which is what I’m leaning towards.

Thanks everyone and appreciate any input!