Seller financed loan is appreciated by most buyers who find it difficult to meet the requirements of conventional banking institutions. In this case the seller holds the house for a period of time until the buyer clears the payment. It is more like an instalment scheme, with the rights resting with the seller the buyer though, can enjoy living in the house. The rate of interest is higher because the seller borrows from a lender and has to repay the lender. Part of the money paid by the buyer goes to the lender and part is retained by the seller for his services. Seller financed loan is useful in many ways for the seller as well as the buyer. The seller can sell the house quickly. This concept is mutual as it benefits both the buyer and the seller. You can sell the property fast as there are no hard and fast rules involved. Only both the parties are responsible for the repercussions.

Even though there are possibilities that a seller may charge a higher rate of interest, this can be negotiated by the buyer. Since two individuals are involved it becomes easier to bargain. At times the seller can offer a great deal to the buyer too. All this depends on the value of the property and the repayment date. Seller finance is mostly opted in situations when the market price of the property is high. The seller can quickly close the deal by financing the whole amount or part of the amount and gain profit from the deal. Likewise, when the house has earned lot of equity at the time of closing a mortgage, seller finance can be opted as the seller can use the equity to finance the buyer. The seller is always secured as the property title remains in his name. In case the buyer defaults the seller still stands to gain as the down payment can be retained by the seller. Likewise the buyer loses the house and the money invested so far. The seller can then sell the house to another buyer for the market price.

The buyer needs to take care of the maintenance of the property while on the contract. The repair cost, tax, insurance and other related household expenses need to be taken care of by the buyer. The seller can spread capital tax gains over a period of years to escape tax bracket. This way his tax liability is reduced to a great extent. Retired people can opt for seller finance to sell their property; since they would have cleared the entire mortgage, there will be no risk of losing the house to the lender. The down payment varies from seller to seller some ask for a small down payment ranging between 20 percent and 30 percent and yet others ask for larger down payments to safeguard their rights. If the buyer pays a big deposit that means he is less likely to walk out of the seller financed loan deal.