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Shared down payment program… Would you do it?

1759 Views 17 Replies 8 Participants Last post by  dougbos
I came across this company Lotly that offers a shared down payment program. The way it works is that:
  • 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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The CMHC offers a much better shared equity mortgage program.

It is pretty pay 5% -10% down and the CMHC matches it. When you sell the home, you pay the CMHC 5% - 10% of the sale price.

If the home value goes down, the government shares in the loss.

Basically, CMHC owns 5 - 10% of the home and you own the rest.

A word of caution........any lender who advances down payment will be registered on the mortgage as co-owner or lien on the home.

That would complicate any future financing involving the home.......such as a HELOC or borrowing for renovations and using the home as collateral.

This could also create problems with the lender for the prime mortgage.

You would have to obtain permission from them to attach the home as collateral for anything.
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