Vendor Funded Deposit
Vendor Funded Deposit – Vendor funded deposit refers to instances in which the seller of a property funds the deposit of their property, on behalf of the buyer. The primary advantage of a vendor funded deposit is that it encourages buyers to purchase the property. Also, the use of a vendor funded deposit encourages those without the equity requirements for larger loan-to-value (LTV) ratio mortgages available to them to capital raise. Using a vendor funded deposit can be especially important for first time buyers who may struggle to raise enough cash for a deposit, especially when there are fewer high LTV ratio mortgages available.
However, there may be instances in which lenders do not recognise a vendor funded deposit as lower than the valuation price. In these cases, lenders may recognise the reduced price from the vendor as the final valuation price, rather than a higher price with the deposit paid. Generally, a vendor funded deposit can be no larger than 5% of the value of the property, so may need to be used in conjunction with a cash deposit by the borrower, in circumstances where a vendor funded deposit is accepted by a lender.
It is especially important when looking for a mortgage to use a specialist mortgage broker with years of experience and thoroughly professional business acumen, to be assured that you are in safe hands. Capital Fortune has a proven track record for excellence, and we treat all of our clients with high levels of respect and support. Whatever your specific mortgage requirements: whether a buyer interested in properties with a vender funded deposit, or a seller looking for innovative ways to expand your property portfolio, Capital Fortune are the people to talk to.
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