What Is a Vendor Take-Back Mortgage? A Win-Win for Buyers & Sellers

Marinella Nicolosi
Jul 21
3 min read

Updated: Jul 28

Canadian homebuyer discussing vendor take-back mortgage terms with seller and lawyer

If you’ve ever struggled to qualify for a mortgage—or felt boxed out of real estate investing—there’s a creative solution more Canadians are using: the vendor take-back mortgage (VTB).

A VTB is when the seller of a property agrees to lend part of the purchase price to the buyer. Instead of the full amount coming from a bank, a portion is financed directly by the seller. It’s legal, flexible, and growing in popularity—especially in a market where traditional financing often falls short.

Here’s How It Works

Let’s say a property costs $600,000. The buyer secures $450,000 from a bank and asks the seller to “take back” a mortgage for the remaining $150,000. The buyer repays the seller in agreed-upon instalments—just like they would a regular mortgage.

Why would a seller agree to this?

In some cases, it helps them defer capital gains taxes. In others, it gives them monthly income from interest payments. And for properties that aren’t moving quickly, it can be a deal-maker.

For the buyer, a VTB can mean fewer hoops to jump through, lower up-front costs, and a chance to get into the market without perfect credit or a massive down payment.

VTBs aren’t handshake deals.

You’ll need a real estate lawyer to draft and register the mortgage. Terms should be clearly outlined: interest rate, payment schedule, and when the loan must be paid in full (often at refinance or resale).

Vendor take-back mortgages are one of the most accessible creative financing strategies in Canada. They help buyers move forward sooner—and let sellers profit in new ways.

If you’re looking to build wealth for your family without being held back by traditional lenders, this is one option worth exploring.

Turn Your Property Sale into Retirement Cash Flow with a VTB

If you are at the stage in life where you are preparing for retirement, offering a VTB can turn a real estate sale into a steady, interest-generating income stream—without the hassle of being a landlord. It’s a tax-efficient way to transition into retirement, create passive monthly cash flow, and stay connected to the real estate market in a lower-risk role.

Grow Your Portfolio with Vendor Take-Back

If you are an active real estate investor, a VTB opens the door to scaling faster with less capital tied up. Instead of draining personal funds or waiting on slow bank approvals, investors can negotiate flexible terms directly with sellers—allowing them to move quickly, structure win-win deals, and preserve capital for renovations, marketing, or additional acquisitions.

Whether you're growing your portfolio or preparing for the next chapter, vendor take-back mortgages offer a flexible, strategic path to building and preserving wealth.

Published: July 21, 2025 - 2 min read

By Private Lending Queen

Listen to this article

0:00

Want to learn more about real estate investing in Canada? Stay updated by subscribing to our blog!

Imagine Financial Freedom—What's Your Next Move?

If you’re dreaming of building wealth through real estate—whether as a confident private lender or a capital-raising investor—our Real Estate Investing Masterclasses are your gateway.

Whether you want to be hands-on or make your money work for you and earn through passive income, we’ll give you the step-by-step clarity, tools, and confidence you need to invest with purpose and power.