Housing affordability in the GTA long ago reached crisis levels, pricing out a lot of prospective buyers, but an innovative new mortgage plan has found a way to bring them back into the fold.
Trillium Housing, a non-profit mortgage assistance program, endeavours to help the GTA’s growing legion of families who are unable to enter the housing market do just that.
Structured as a second mortgage, Trillium helps buyers with their down payments; however, repayment is deferred until the home is resold or refinanced, with no monthly payments, and leverages and carrying costs are reduced.
According Trillium’s Principal, Joe Deschênes Smith, the mortgage plan isn’t a subsidy, it’s an investment. If Trillium puts up 25% of the purchase price into the Trillium Mortgage, as a shared appreciation mortgage it would recoup that amount of the home’s appreciation value when it is resold.
Yet, to protect often vulnerable buyers, Trillium is on the hook for 50% of any loss – a significant risk far greater than its investment.
Nevertheless, Trillium’s goal is to help families build equity in an enigmatic housing market.
“Some CMHC studies have shown that equity is the number one asset that families have,” said Deschênes Smith. “It’s an effective tool because you have to live somewhere. You pay down your mortgage by building up equity, and that equity build-up provides families with long-term stability. Even the province, when building anti-poverty strategies, looks at how to help families build equity, and homeownership was a key component.”
The appreciation monies accrued by Trillium are reinvested into mortgages for more families in need, effectively increasing the number of people who participate in not just the housing market, but the financial services industries built around it.
“Because we’re issuing a mortgage and we need all the regulations to do that, certainly for first-time buyers in particular, finding a fit with a mortgage provider can take time,” continued Deschênes Smith.
“Often times with mortgage brokers, they forget that extra service of explaining clients through regulations” and other mortgage brass tacks.
“We give extra support.”
Innovative programs like Trillium’s that seek to cast a wider net over prospective homebuyers certainly provide the industry with a boon. Michael Pallotta, a mortgage agent with Dominion Lending Centres
Bedrock Financial who oversees Trillium Mortgages, says putting more purchasers into the market can only mean good things for everything from the industry to the economy.
“It does assist brokers and agents, as well as lenders,” said Pallotta. “It puts more purchasers into the market. Brokers are here to assist and help, but the end-users, being first-time purchasers, end up being the big winners because without this assistance their homeownership dreams wouldn’t come true.”