The housing market has slowed. Sellers are anxious, Buyers are cautious, and the “For Sale” signs seem to linger a little longer than anyone would like. So, how do you make your home stand out in a crowd of lookalikes?
I recently spoke with a Seller who had lived in their home for 25 years. The mortgage had long been paid off—gone in about 15 years—and now they were thinking of a move. Their biggest worry? Getting noticed in a slower market.
We covered the usual playbook: price it right, maybe even slightly below market to generate buzz; stage the home so it shines; tweak the décor to appeal to more Buyers. All good ideas, but not exactly new. Then I mentioned a strategy they hadn’t heard in decades:
Vendor Take Back Mortgages.
Yes, the very word “vendor” sounds like it belongs in a real estate museum. Today we say “Seller.” But the concept? Still powerful.
What Is a Vendor Take Back (VTB) Mortgage?
In simple terms, the Seller becomes the bank. Instead of taking all their equity out at once, the Seller agrees to hold a mortgage for the Buyer. It might look like this:
- Home price: $500,000
- Buyer down payment + closing costs: ~$90,000
- Seller holds mortgage: $425,000 at 4% for five years
On paper, it’s straightforward. In practice, it can be a game-changer.
Why Buyers Love It
For the Buyer, the biggest perk is dodging CMHC insurance premiums. With a traditional mortgage, the $425,000 financing would trigger an insurance cost of about $12,000—plus HST, bringing the total to $13,500. Add that into the mortgage at 4.2% over five years, and you’re talking about an extra $17,000 in costs.
By sidestepping the insurance and securing a slightly lower rate, the Buyer saves thousands. And because Seller financing can be more flexible than bank bureaucracy, it’s especially attractive to self-employed Buyers who might otherwise struggle with traditional qualification hoops.
Why Sellers Should Pay Attention
So what’s in it for the Seller? Two words: stable income.
At 4% over five years, the Seller earns about $95,000 in interest, while the Buyer chips away roughly $61,000 of principal. In other words, the Seller enjoys steady cash flow, backed by the Buyer’s $85,000 down payment—a significant cushion of protection.
Compare that to parking the equity in the stock market, where returns can be unpredictable, and the appeal of a guaranteed monthly payment becomes clear.
A Strategy with History
When I started in real estate back in 1986, VTBs were common tools in a slower market. Sellers held mortgages to help move properties, and Buyers embraced the flexibility. With today’s market showing similar signs of sluggishness, it wouldn’t surprise me to see this strategy stage a comeback.
Is it risk-free? No investment ever is. But with the right structure, it’s a powerful way for Sellers to make their property more attractive, and for Buyers to get into a home they love—without the extra baggage of insurance fees and red tape.
The Bottom Line
Markets change, but real estate has always rewarded creativity. If you’re a Seller in today’s market, remember: sometimes the best way to stand out isn’t about a fresh coat of paint—it’s about bringing back a strategy that worked decades ago.
And if you’d like to explore how a Vendor Take Back could help you sell, you can reach me at lindsay@buyselllove.ca or 905-743-5555.