A vendor take back charge, often referred to as a vendor take back mortgage is a type of financing arrangement in real estate transactions where the seller (vendor) of a property provides a portion of the financing to the buyer. Instead of receiving the full purchase price upfront, the seller agrees to “take back” a mortgage on the property, meaning the buyer repays the seller over time according to agreed-upon terms.
In this arrangement, the buyer typically makes a down payment and takes out a mortgage from a traditional lender for part of the purchase price. The remaining balance is covered by the vendor-take-back mortgage, which is secured by the property itself. The terms of the vendor-take-back mortgage, including the interest rate and repayment schedule, are negotiated between the buyer and seller.
The vendor take back charge refers specifically to the legal and financial obligation created by this mortgage, recorded as a lien or encumbrance against the property. This charge ensures that the seller has a legal claim to the property until the vendor-take-back mortgage is fully repaid.
Vendor take back mortgages are often used in situations where the buyer has difficulty obtaining full financing from traditional lenders or where the seller wishes to facilitate the sale by offering more flexible financing terms.
