I think it will be settled at the end of the term when I sale the property or refinance. Also you are 100% right that I would build less equity over the years with the current interest rate.
Shared down payment program… Would you do it?
I came across this company Lotly that offers a shared down payment program. The way it works is that:
Just thinking out loud here, the pros I can see is that
The cons:
This program sounds quite interesting to me. What do you folks think of this?
- I put in 5% down payment, and Lotly put in another 15% down payment. I can use all this money to buy a place.
- I will pay for all monthly costs like mortgages & maintenance. I get to keep all the equity I pay down through mortgage payments.
- Towards the end, I will pay roughly 50% of home appreciation to buy out Lotly.
Just thinking out loud here, the pros I can see is that
- I could really use some help on down payment to buy the place I want
- There is no monthly payment to Lotly
- I keep all the equity I pay down on my mortgage every month. Better than renting!
- Seems like renovation is allowed
The cons:
- 50% appreciation is quite a bit to give away, especially if the market does well
- My monthly payment is likely to be higher than what I’m paying for rent atm
- I can’t sell the place in the first 3 years
This program sounds quite interesting to me. What do you folks think of this?
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Just curious why you think this would only work for the first-time homeowner?... if you really want to be a "homeowner" (first time only), then this program can help.
Thanks for sharing this! I didn't know CMHC offers a program like this. I wonder how it is like to work with CMHC on this. Are they gonna be as slow as they normally are...The CMHC offers a much better shared equity mortgage program.
@Covariance
The company said that in a falling market, investors will share the same percentage of loss as they would for the upside. The thing is I wouldn't want to sell or refinance if the property value is lower than what I bought it for, because I would also lose part of my downpayment. In that case, it's better if I can extend my 10 year term, hoping that the market will come up eventually.
The company said that in a falling market, investors will share the same percentage of loss as they would for the upside. The thing is I wouldn't want to sell or refinance if the property value is lower than what I bought it for, because I would also lose part of my downpayment. In that case, it's better if I can extend my 10 year term, hoping that the market will come up eventually.
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