6 mins

How home equity works in Key’s co-ownership model

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The jump from renting to owning can be one of the most difficult financial steps many will make in their lifetime. With increasing interest rates and high demand, the gap between renting and owning only continues to grow. First time homebuyers are becoming locked out of the real estate market, and many are giving up on the dream of homeownership.Co-ownership is a solution that addresses this seemingly impossible transition. This alternative homeownership model removes the two of the greatest pain points of traditional ownership: savings for a large down payment and the need to qualify for and take on a mortgage. By removing the two most significant barriers to traditional ownership, our model allows aspiring owners to build home equity many years sooner.

What is home equity?

Simply put, home equity is the value of a homeowner’s investment in their property. This means that it’s the portion of the home that they actually own at any given time based on its current market value. Because home equity is based on the property’s current market value, its value fluctuates over time. For many, home equity is one of the most important investments they’ll make in their lifetime, as it's a central way to build personal wealth.

Your initial home equity investment

With a co-ownership model, you co-own alongside one of our investors or property owners. Their partnership is what allows you to start owning and have a place to call home for an initial equity contribution that starts at just 2.5%, depending on the building. That's around $15k for many of our properties, so you no longer need to spend so many years saving for a 20% down payment to start owning and building equity.Your initial home equity investment grows with the value of your home. As with all real estate investments, you are also taking on the risk of your home depreciating with the market. Thankfully, depreciating values has been a very rare exception across Canada for many years.

How you can contribute to your equity

Because there is no mortgage in Key’s model, this means you can increase your equity position at your own pace. Whether through monthly contributions or in a lump sum.Each month there is a monthly residency payment that primarily covers the portion of the suite you don’t yet own, plus important things like maintenance fees and property taxes. Every month, a portion of your monthly payment automatically goes towards building your equity, this starts at $50 and is dependent on the home you’re in, but you can also contribute more if you want. The best part: as you build more equity over time, the lower your monthly payment becomes.

What happens when you move out

When you’re ready to move out, after the first year you can simply give 75 days notice and you will get back your equity plus appreciation and appreciation from your co-financing benefit at market value.By allowing aspiring homeowners to build home equity without needing to take on debt or be locked into a long-term commitment, co-ownership is helping make the dream of homeownership a reality once again. If you’re an aspiring homeowner looking to get their foot in the door of homeownership, consider learning more about what it means to co-own your home and how you can benefit from co-ownership.

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