New Ontario Down Payment Financing Service Raises Concerns for Homebuyers and Experts
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Ontario-based financing company Ourboro is offering to contribute between 25% and 75% of a down payment for first-time homebuyers in several Canadian cities in exchange for an unequal share of the home's appreciation in value. Borrowers repay the company's share out of the equity when they sell their home, considering the transaction a shared ownership arrangement rather than a loan. Since launching in January 2022, the firm has received over 800 applications and contributed $5m to house down payments.
However, mortgage broker Mary Sialtsis warns that the program's risks and caveats are considerable, particularly for those who pay a high share of their down payment through the program. Homebuyers working with Ourboro also risk being turned down for a mortgage by banks hesitant to take a risk on a property co-owned by another lender. Alternative lenders who provide mortgages might charge extra fees and a slightly higher interest rate.
Sialtsis suggests prospective homebuyers struggling to come up with a 20% down payment might still be able to break into the housing market without relying on companies like Ourboro. One option is to consider co-owning a home with friends or family. Another option is to speak with a financing expert about contributing a smaller down payment. Ultimately, Sialtsis recommends seeking advice from experts and knowing all options when faced with uncertainty about how to finance a home.
Read the full article on: CTV NEWS
