Thursday, March 28th, 2024
  • By Sue Aitken
  • Posted Monday, Feb 27, 2023 10:16 am

Company will chip in $250K to help you buy a home... but there's a catch

Experts say homebuyers need to be wary of ‘co-ownership’ model that is tilted in investors favour

The expansion of a real estate “co-ownership” business into Hamilton is giving would-be buyers another path to home ownership by offering down payment help in exchange for a large chunk of equity.

Ourboro will kick in up to $250,000 toward a down payment and, in turn, they profit by taking a big cut of any increase in value of the house the next time it is sold.

Experts say the additional liquidity can be the difference to purchasing a home in the city or neighbourhood they want, but they also warn that the investment model is skewed in favour of the investors. 

The Toronto-based company manages “a fund of real estate investors that would rather help people become homeowners than be landlords,” according to the company’s chief product officer, Alex Kjorven. Ourboro, which is expanding from its home market across Ontario, including Kitchener, Waterloo, Guelph, and London, takes investors funds to “deploy them in down payments,” Kjorven says. So far, about $5 million has been invested by the company into real estate purchases in the GTA since January 2022, according to a recent media release. 

How it works

Homebuyers who need down payment help could turn to Ourboro to invest between 25 and 75 per cent of their down payment — five to 15 per cent of the purchase price — up to $250,000. In return, Ourboro gets an equivalent share, 25 to 75 per cent, of the equity of the home.

The benefit, according to Ourboro, is that it helps buyers boost their down payment to 20 per cent, providing savings on default insurance and interest, while lowering monthly payments. 

When the home is resold down the road, the buyer gets back all the money they spent on mortgage payments. But the funds spent on the down payment and the value that the home has appreciated is split, relative to the...[READ MORE]

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