Calgary-based developer, New Urban, has found a new strategy that allows the home buyer to be down payment free when purchasing a unit in their upcoming condo building, according to The Globe and Mail.
President and CEO of New Urban, Dan Van Leeuwen, has been looking at the affordability of housing for Calgarians for some time. He gathered an idea on how to assist those who are struggling to purchase a home through a new homeownership strategy.
In Leeuwen’s strategy, he proposes that the developer’s contribution should take a different form, other than the traditional form, in partnership with the municipality.
The strategy looks at several components such as shelter, financial aid, social support and other components.
The target population for this strategy are primarily those with reliable income but have not acquired the wealth or status to save up for a down payment to purchase their home. If Leeuwen could help this population, he would also help free up renting buildings and subsidies for those in greater need.
The strategy was conceived by INHOUSE, a not-for-profit arm of New Urban, and is called SELF (Shared Equity Lender Financing).
SELF replaces the need of a down payment on a home with the developer’s equity in the project and a deferral of the land value. This replacement essentially means that 35 per cent of the purchase costs of the units will be from the deferred value and the remaining 65 per cent will be the new mortgage value for the unit.
When the owner is ready to sell his or her home, 35 per cent of the sale price will be given to INHOUSE and the remaining 65 per cent will go to the owner to pay off their mortgage, and the remaining will be equity for the owner.