Securing a home loan to finance the purchase of a new property has become considerably more difficult in recent times.
Although interest rates are at record low levels, most buyers are still struggling to meet the strict requirements of get a bond.
But, as the problem continues to grow a number of alternative solutions are becoming very popular.
Installment Sales is one alternative that many buyers are using these days to buy houses without involving a bank at all.
What are Installment Sales?
Basically an installment sale is an agreement between the buyer and seller where the buyer agrees to acquire the property in installments over a period of more than a year and less than five years.
The real benefit of an installment sale is that if the buyer does not need to apply for a home loan. Only at the end of the installment period will the buyer need to close the transaction via a home loan or cash.
The biggest problem with these types of agreements is – of cause – what happens if the buyer defaults on his monthly payments?
To protect the seller in the case when the new buyer defaults, the contract states that the all previous payments made by the buyer will be lost and the property will revert to the seller again.