Improving Housing Choices

  • 17% — Cost of the Land
  • 34% — Cost of borrowing at 5%
  • 9% — Cost of Moving every 7 years
  • 20% — Cost of Maintenance and Replacement
  • 4% — Government Charges and Rates

Yearly Cost of Housing for same Value Dwelling

Traditional Loans Cost is 100 per year
Co-op Loans Cost is 55 per year

An Example set of rules for a Co-op

  • Members own the titles to the property in which they live.
  • A person can become and stay a member of the Co-op if the member is willing to have and maintain a first mortgage of 10% of the market value of the dwelling in which the member must reside.
  • Members can have second mortgages but only with the Co-op. The second mortgage yearly repayments are a minimum of 5% on the total market value of the dwelling.
  • Members get the right to invest in mortgages up to the market value of their property. They can transfer the right to other members. Members who invest get back their investment in equal yearly or monthly amounts plus 4% times the number of years the money has been invested.

Comparison between Co-op, Bank Loans and Rent

A member invests $100,000 of money in the Co-op. They take out a $500,000 mortgage from the Co-op and use the money to purchase a home of value $500,000. They repay their mortgage in yearly payments of $27,500. Half the money paid comes off their mortgage amount. Their investment accumulates at the rate of $4,000 each year. At the end of 20 years the member has $180,000 in investment. The member has paid off $275,000 of the $500,000 mortgage and are left with a debt of $45,000.

  • Traditional Loan — $329,000
  • Renter — $180,000

Comparison without the $100,000 deposit

In the above a person pays $550,000 to live in a dwelling. At the end of the 20 years the value in ownership of the dwelling without any $100,000 starting capital and using the three approaches is:

  • Traditional Loan — $76,350
  • Renter — $0

Funding Co-ops — what are they?

Funding Co-operatives are different from Housing Co-operatives. Individuals in Housing Co-operatives can use Funding Co-ops as a way to buy into the Housing Co-op . Developers can use them to fund a development. A Body Corporate or Public Housing or any group of people with existing mortgages can work together to reduce mortgage stress. Public Housing can use them and turn their clients into home owners.

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