You might not have heard of Shared Home Ownership yet. This is a smart alternative way to buy your first home and especially if:
You have a lower deposit, and the other options do not work.
Your income means that traditional mortgages are unaffordable.
Your credit score is not great (credit issues or defaults)
You have existing debts that you are also paying
Understanding Shared Home Ownership
Understanding Shared Home Ownership
Shared home ownership offers a breath of fresh air for Kiwis eager to break free from the rent cycle. This provides an affordable means of entering the property market without the need for a large deposit and in a more affordable way.
There are a few shared ownership options, but many of them are provided by the property developer and that means you are restricted to buying one of their properties at the price that they have set. The preferred option is where you partner with a commercial entity called YouOwn and can therefore choose to buy any home (almost) and that often means that you can get the perfect house to call your home.
The involvement of third-party companies like YouOwn, in partnership with banks such as SBS Bank or non-banks like Basecorp Finance, brings additional options to the table. These partnerships offer varied financial setups, enabling you to choose a model that best fits your needs and goals. If you can then the bank option with SBS would be best. In some cases, if you have credit issues, defaults or other debts then you may need to use the non-bank option at least for the first 12-months.
Engaging with a financial advisor can further clarify how these arrangements would work for you and align with your household income and long-term plans.
FAQ's
What is shared home ownership?
Shared home ownership is an innovative way to own a home where you purchase a share of a property, while an organisation such as YouOwn will owns the remaining share. This approach makes it easier for young Kiwis to enter the property market, as it reduces the amount of deposit and mortgage needed.
How does shared home ownership benefit young Kiwis?
Shared ownership allows young buyers to step onto the property ladder sooner by lowering financial barriers. With a smaller deposit and mortgage required, it becomes more achievable to own a home. Additionally, shared ownership often provides access to properties in desirable locations that might otherwise be unaffordable, offering a smart alternative to renting or saving for years.
Is shared home ownership a good option?
Shared home ownership can be a good option and better than staying renting, but you need to understand how it works and the pitfalls too. By owning a share of a property you can benefit from any increase in property value over time and it also offers a level of security and stability that renting does not. You will want to buy the remaining share from YouOwn and that will be at the future market value.