Beyond A Traditional Mortgage: Alternative Ways Of Buying Property

Posted on: 26 July 2017

A conventional mortgage is the most common way of buying a house, but it isn't the only one. Here are alternative ways of property purchase that don't involve a traditional mortgage:

Seller Financing

Some sellers will allow you to purchase their property via what is known as seller financing. Seller financing works similar to a mortgage, with the main differences being that the seller takes the place of the bank and that the mortgage duration is likely to be shorter (say five years), with a balloon payment at the end of the short period.

The main advantage of seller financing is that it may allow you to purchase a property even if you don't meet the prerequisites of a traditional mortgage. For example, you may enjoy seller financing with a lower credit score or a shorter work history than most banks would allow for a mortgage.


Buying a home on cash purchase is a good alternative to mortgage purchase. Unfortunately, raising the whole amount isn't easy for most would-be homeowners. However, if you can raise a fraction of the targeted amount (say half), you can still get a property by cooperating with another person. This is known as co-ownership, where you pull your resources with another trusted person (say a family member or a colleague) and buy a house as a unit. One of you can then buy out the other party when their financial status improves.

Borrow From Alternative Sources

Mortgage lenders aren't the only sources of money for buying property; alternative sources exist. For example, you can borrow money from your family members, retirement accounts, or life insurance policy. Research the pros and cons of your chosen alternative to prevent financial headaches later on. For example, failing to pay back your insurance-backed loan would leave your beneficiaries or heirs without the expected payout.


This is a viable alternative if you can afford the monthly payments. In this arrangement, you move into the property and pay rent for a few years, say three, before buying the property. This allows you to get your financial house in order (for example, improving your credit score). A percentage of your monthly rental fees go towards the purchase of the house, but you may lose it if you end up not buying the house.

As you can see, you should not shy away from buying a home if you can't qualify for or don't want to take a traditional mortgage. Just do your research well, and you will soon be able to purchase your dream house.


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