There are several uncommon methods that are used for home financing in Australia, all which work outside of a bank, lender and real estate agent for specific results.  One of the processes that many use is the vendor loan.  This allows you to work with a rent to own scheme in which the owner carries the mortgage until you decide to buy.  While this concept has become more popular in recent years, many have not used it because of the untraditional means it uses.  However, this concept is one that has developed over several centuries in Australia, making it one of the safest methods for buying a home. 

The first type of vendor loan that was used in Australia began in the 1870s and 1880s when land was bought and sold for re-purchase.  The new concepts of the real estate market allowed property developers to sell directly to those interested in buying.  The vendor loan concept at this time included ¼% of the total price for deposit, ¼% after 6 months, ¼% after 12 months and the final sale 18 months after the land was bought.  Since there were not popular banking systems during this time, everyone relied on vendors to purchase a property. 

The growth of this particular concept reached wide popularity by the early 1900s.  This led to the government creating legal practices and guidelines for those that used a vendor loan to purchase properties.  The 1927 court case of taxation vs. Thoroughgood led into complete legality of this type of loan and secured different concepts into place.  During this time, a terms contract was put into place to safeguard both the vendor and the buyer and to create a specific safety net for those who were interested in purchasing in this way.  This result was one that then provided a new alternative to those who were interested in the direct loan alternatives. 

The foundation of the vendor loan is one that continued to be used, with a surge in interest in the late 1960s, specifically because of the large number of immigrants that were moving into Australia.  This created the rent to own program, in which young couples could work with a vendor before the purchase of a home while establishing themselves financially in a home.  This has led to many finding a different way to purchase a home without the initial obligations.  In the late 1980s, this was considered secondary to bank loans.  However, the changes in the economy has led it to reemerging into a popular trend.