Vendor Take Back or VTB Mortgages

A VTB is a second mortgage held by the seller of a property. The VTB fills the gap between the maximum the first mortgage lender is willing to lend, 65% for example, and the amount of the downpayment, 5% for example. So in this example the client would need a VTB of 30%.
 
The idea is to approach the seller to see if they would be willing and able to extend this credit. Usually on an interest only basis for a period of time, usually associated with the expected time it would take for the buyer to qualify for a new first mortgage sufficient to pay out the Original First Mortgage and the VTB. E.g. 3 years.
 
It is important to find, and discover the terms of, a willing first mortgage lender before proposing a VTB mortgage to the seller.  This will determine the amount of VTB required and also may limit the payment that can be made on the VTB to still qualify for the First Mortgage.

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