What you need to know about the vendor take-back mortgage


In this video, I discusses the vendor take-back mortgage.

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You use this tool when there are no other options available. You use it sometimes when you are desperate and you use it sometimes for convenience. It’s also something that most sellers may not consider, but it could turn out to be a savvy investment for them. In this video, I go over all the pros and cons of the vendor take-back mortgage and why you need to understand how it works.

Barry Lebow, FRI, Master-ASA, ABR, SRES, is one of Canada’s most recognized real estate authorities. Now in his 54th year of professional real estate, Barry has been honoured by many real estate associations for his work in the profession. He has testified in more than 500 trials across North America. He is the founder of the Accredited Senior Agent designation program. A teacher, trainer and educator, he is an active broker at Re/Max Ultimate Realty in Toronto. Visit barrylebow.com to contact Barry.


  1. Hey Barry
    Great message, we were doing this all through the 70’s and into the 80’s when rates were 20 plus %. We also did AFS ( Agreements for Sale), but that’s another story. You mentioned the expired date on the second Mtg, we used to use a postponement clause allowing the first to be replaced, but any increase of the first had to be applied to reduce the second.
    VTB was for many years just a normal way to do business.
    Again great message, thanks
    Ron Rouse
    President and Broker of Record
    Royal LePage Credit Valley Real Estate

  2. Hello Barry,

    Timely topic and a blast from the past. My very first transaction in 1977 involved a VTB to sell. The interest rate was a double digit and the buyer got a more attractive rate.

    Question : When dealing with home owners who are cashing in and selling in today’s market, to move into a rental or retirement home. Why not recommend a VTB to hold (provided there is a substantial down payment and solid credit history from the borrower)

    Are we overlooking an opportunity for our empty nesters who will earn a higher interest what the bank is offering in a saving account ? To safe guard, this mortgage can’t be transferred upon selling. I am sure there are other safety measures, yet to be included.

    Always good to hear from you Barry

    • Tom, sorry for my delay in responding. I just forgot that people post comments! I have been recommending VTBs to my senior, downsizing clients for years now. Best security that they know – their own house – doesn’t get better than that.

  3. What penalties are typically associated with a VTB if property sold due to divorce before expiry?

    This very old article, lawyer vetted, might provide a little food for thought… for new agents.

    * Gift Money, Homes and Divorce
    (Was It a Gift or a Loan?)


  4. good video- you forgot to mention that if the property is not a primary residence, you can defer your capital gain with vtb.

  5. Hi Barry, great article, I worked for my father Ken Wiles, and took over the office.
    He taught me long ago before I even had my license about VTB’s he even had a company that would buy the VTB’s.
    To many new young realtors with very little knowledge running around as pro’s who need to be taught think outside the box.
    I used VTB’s to survive the 82 recession with the high rates.

    Regards Rick.

    Rick Wiles, Broker F.R.I.
    Chestnut Park Real Estate Limited, Brokerage
    Collingwood Ontario
    [email protected]
    C: 647 839 9582
    Web: http://www.rickwilesrealestate.com

  6. Agent alert:

    When the lawyer draws up the documents for the VTB make sure and double check that he speaks to if that VTB is transferable or not, should the new owner decide to sell the house before the VTB expires.

    Also take the responsibility on behalf of your clients to double check that the VTB actually got registered on title.

    Yes much of the responsibility is with the closing law office but they have been known to not register a VTB on title.

    Check, check and double check details throughout the process. It’s your fiduciary duty to keep your eyes on things, whether representing the seller/vendor or the buyer/purchaser but do all paperwork through an expert, who is typically not you in this sort of arena. There is a huge responsibility with a VTB. But it’s still the agent’s job to monitor the goings-on.

    Carolyne L

    Sent from my iPhone


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