All Forum Posts by: Michael K.

@Michael K. Do a VTB and have your lawyer register it as a first charge mortgage. This will have zero effect on your future refinancing ability. The institutions will not look at your previous loan, they will just look at what the asset is doing. We do this all the time! Congratulations on getting an owner financed deal.

Thanks Melanie! However could you please confirm what you mean by institutions not looking at previous loans? Specifically wouldn't institutions see the VTB charge on the property title when I try to take out equity in the future? And subsequently use the terms of the VTB as part of the DTI calculation, similar to a conventional mortgage? Or do institutions treat VTB differently than conventional mortgages when it comes to taking out equity?

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Originally posted by @Huong Luu:

This came up in the Canadian forum, so if the VTB is not in Canada, then ignore my comment.

@Michael K. If your lawyer doesn't set this up as a VTB, then how will you have ownership or be on title? If the owner is doing a VTB to delay capital gains taxes, then it does need to be registered. If he is doing this to delay breaking his mortgage, then you are doing an AFS and you will need other legal documents. Are you sure you mean refi? That would mean the new lender would replace your VTB...which you don't want. I think what you want is just a reno loan, which you can do. A VTB registered doesn't mean you will be hindered on getting a HELOC, or a reno loan. You just need to find a lender willing to do that. So without knowing what province you are in, it is hard to suggest a lender. Another option is if you don't qualify for a HELOC, look into zero to low interest credit cards. Good luck. Sounds like a great deal for you.

Thanks for responding! Yes, this is located in Ontario Canada. To be clear the property is currently already mortgage free as the seller says the title is free and clear of any encumbrances. So my thinking was the title would be transferred to me by way of a promissory note, so as to keep the title free and clear of any new encumbrances. So you’re correct that it would not be a refinance, perhaps just getting a collateral mortgage registered.

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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!

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All Forum Posts by: Michael K.

Michael K. has started 1 posts and replied 3 times.

Post: Vendor take back mortgage or promissory note?

Post: Vendor take back mortgage or promissory note?

Post: Vendor take back mortgage or promissory note?