Some homeowners can offer a seller loan to a buyer, it is simply a loan made directly between the seller and the buyer to facilitate the transaction, no recourse to a bank loan is possible even if in certain cases of a figure, a consumer loan will be taken out to finance part of the acquisition. Buyers with a significant contribution can naturally turn to seller credit, the contribution will be paid at the time of the signing of the notarial deed, and the rest will be reimbursed according to the terms agreed with the seller.
Buy a house with a seller loan
To be able to buy the house, buy it and the seller will agree on the repayment terms, they will define the amount that will be granted, the repayment duration, interest, and necessarily the monthly payments that will be established. All this information will be included in a notarial deed, it is an official document making it possible to recognize the debt and above all to ensure that everyone’s obligations are respected, both at the level of the seller and of the buyer. The drafting of the notarial act involves notary fees, often borne by the buyer.
When is the seller credit interesting?
In a seller credit, it is the existing owner who takes all the risk on the financing which is granted, he will, therefore, take all his precautions regarding the financing and avoid granting too large an amount. On average, the seller credit will not exceed 20% of the amount of the property, so it is a particularly interesting solution on properties with moderate, or even low prices. The contribution covers 80% of the acquisition and the rest is reimbursed via a short-term seller credit, between 1 year and 2 years.
The seller should not be in a hurry to obtain the funds, they are often owners having several residences and wishing to resell the property to recover funds, the seller credit allows them to obtain an amount quickly with the contribution which is paid at the conclusion of the contract, then the rest of the sum is recovered over a short period. For buyers, this is interesting in the context of a property intended to be renovated, a small house, or one requiring major work. Note that the buyer is not obliged to ensure his loan in the event of death, disability, or illness, it is, however, a highly recommended cover and sometimes required by the sellers themselves.
Compare financing solutions
To obtain a seller loan, you must provide guarantees to the buyer, if the contribution is the first essential element, you must then present your financial situation and some essential information such as the debt ratio. It is also advisable to compare conventional financing proposals with the seller credit, thus making it possible to compare the cost of the two solutions and therefore to choose the best alternative. When rates are low, the conventional home loan can sometimes be more attractive than using a personal down payment in its entirety.