Vendor Take-Back Mortgages: A Growing Trend in Ontario's Buyer's Market

With Ontario inventory still running well above the five-year average, some sellers are getting creative to stand out. One option gaining traction in 2026 is the vendor take-back (VTB) mortgage.

What a VTB actually is

Instead of the buyer getting 100% of their financing from a bank, the seller finances part of the purchase price directly. The buyer makes payments to the seller under agreed terms, secured by a registered second mortgage on the property.

Why sellers are considering it now

In a buyer's market, a VTB can be the difference between a sale and a listing that sits. It can help a buyer who's close to qualifying but needs more flexibility, and it can make a property more competitive without cutting the price. For a seller who doesn't need the full proceeds immediately, it can also generate interest income on the take-back amount.

What to lock down before agreeing to one

• Independent legal advice — for both sides, separately
• Proper registration of the second mortgage, with clear priority behind any existing financing
• A real default plan in writing — what happens if a payment is missed
• Term and rate clarity — interest rate, amortization, and any balloon payment at the end of term

Where it fits with a 1% listing

A VTB doesn't change how listing commission works — it's a financing structure between buyer and seller, layered on top of a normal sale. If a VTB could help move your property faster in today's market, it's worth discussing as part of your pricing and marketing strategy before you list, not after weeks on market. For buyers evaluating an assignment sale or a resale purchase, it's also worth asking whether the seller would consider one.