In 2005 Melissa Rumney (fictional name) lived in a rental apartment and paid monthly rent, like many others with an income of $27,000 year.
But in that year, she changed her life by making the brave decision to buy a home. She did not do it alone. She was able to purchase a home in Pickering in a building developed by Options for Homes and financed by Home Ownership Alternatives.
The newly built home had a value of over $160,000 and she could afford the payments on a regular 1st mortgage for a home worth $130,000.
How could she afford it? The home she bought came with an HOA 2nd mortgage worth $32,000 which she did not have to carry on her income. What made home ownership a reality for Ms Rumney was that the $32,000 2nd mortgage was set up to be repaid only on resale, with no payments of principal or interest until then. So she could invest in a home with manageable payments, while HOA held the 2nd mortgage to be repaid when the unit was resold or she decided she could afford to repay voluntarily.
That 2nd mortgage was made up of $20,000 provided by HOA and $12,000 provided by the Province of Ontario under the federal/provincial Affordable Housing Program. This partnership between the home purchaser, Home Ownership Alternatives and the province created an opportunity for the creation of some real family equity.
Three years later she resold her home. It had increased in value to over $170,000. She was able to pay off both mortgages, recoup her down payment and had earned at least $10,000. This is $10,000 in family equity that would not have been created had she continued to rent. It provides family equity and options for the future, whether for the next home, education or retirement.
