Under the "Affordable Equity" model a household purchases a share of the property at a price point they can afford (subject to criteria and conditions). The remainder is owned by The Housing Foundation and both parties will be represented on the property title. The household organises their own mortgage (with support from Housing Foundation), the advantage being that under this arrangement, they will have a smaller mortgage than they will ordinarily require to purchase the property at market value.
See the example figures below for a 70% ownership share:
|Property's market value (for example only)||$650,000|
|Household buys 70% of the property with their mortgage and deposit||$455,000|
|New Zealand Housing Foundation's ownership amount is the remaining 30%||$195,000|
The Housing Foundation retains 30% ownership of the property. Housing Foundation's ownership is the difference between the value of the property 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. The amount that Housing Foundation owns does not cost the household, as Housing Foundation does not charge rent or a fee on the part it retains.
Under this arrangement, the household will need to secure their own mortgage from a bank. They can also choose to increase their ownership percentage at any time.
Benefits of shared ownership:
- You get all the privileges of home ownership without having to fund 100% of the cost yourself
- You buy what you can afford
- Your share grows in proportion to your investment
- You can increase your share to 100% over time; Housing Foundation encourages you to become the full owner of your home
- When you want to move on you can sell your equivalent share (eg: 70%) back to the Housing Foundation, or on the open market, based on an independent valuation less a management fee.
Find out more details about the Affordable Equity Programme in our Frequently Asked Questions (FAQs).