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Article: Trading on dreams.
- Article from:
- Australasian Business Intelligence
- Article date:
- May 1, 2003
CopyrightCOPYRIGHT 2003 News provided by Comtex. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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May 01, 2003 (Personal Investor - ABIX via COMTEX)
The lack of regulation relating to "vendor financing" has led to abuse of the system in some cases. Vendor financing, or "wrapping", has been advertised as a way for aspiring home owners to secure their own property without the usual deposit. The purchaser is loaned funds at a high interest rate and is expected to build up equity in the home before refinancing under a conventional mortgage arrangement. The advantage for the property owner is a reliable capital gain as their interest rate is below that of the purchaser's. However, in the event of payment defaults, the property reverts to the original owner, ...