Under the "affordable equity" model a household purchases a share of the home to a level they can afford (subject to certain parameters and conditions). The remainder is owned by the HF and both parties would be represented on the property title. The household organises their own mortgage with the advantage under this arrangement that they have a smaller mortgage than they would ordinarily require to purchase the market valued property.
See the example figures below for a 75% ownership share:
|Property's market value||$400,000|
|Value of 75% of the property||$300,000|
|Household buys their home with mortgage plus deposit||$300,000|
Housing Foundation retains 25% passive ownership of the house. HF's ownership is the difference between the value of the home and the amount the household (shared owner) can provide. The householder's funds come from their deposit saved and the mortgage amount borrowed from the bank. In the above example HF's ownership amount is $100,000.
Under this arrangement, the householder will need to secure their own mortgage from a bank. They can also choose to increase their ownership percentage at any time.
- The benefits of Shared-Ownership
- You get all the privileges of ownership without funding 100%.
- You buy what you can afford.
- Your share grows in proportion to your investment.
- You can increase your share to 100% over time
- When you want to move on, you sell your equivalent share (e.g. 75%) back to HF, or to the open market, based on an independent valuation less a management fee.
Find out more detail about Affordable Equity in our Frequently Asked Questions (FAQs)?