Take a look at our case study to see how this works in the real world.
They’ve been together for four years. Kate is 29 years old and Jonah is 27.
Kate is an engineer earning $68,000 a year and Jonah is an office administrator earning $47,000 a year.
They have a budget of $750,000 - $850,000.
They have $5,000 cash savings in the bank and $25,000 between them in KiwiSaver
They’re in their mid 50s.
They have a family home valued at $1 million and a mortgage of $250,000.
They’re keen to invest in property for their retirement. They want to help someone into their first home, without all the hassles of owning an investment property.
Kate and Jonah would like to purchase a two- or three-bedroom home in a suburb within a 20km radius from Auckland City.
Bob and Mary want to invest in a freestanding property, duplex or townhouse that’s 20 minutes drive from Auckland City (off-peak traffic of course).
Kate and Jonah work with Levridge to gain a pre-approval from the bank for a $640,000 mortgage (based on purchasing an $800,000 property).
Bob and Mary agree to provide a 20% deposit for Buyers, Kate and Jonah. That’s $160,000, for the purchase of an $800,000 property.
Kate and Jonah find their first home. Yay!
Bob and Mary are happy with the home Kate and Jonah have chosen.
The costs for these reports are shared between Kate and Jonah, and the Investors, Bob and Mary. They transfer $1,250 each to Levridge, who order the reports and pay the fees on their behalf. Any money not used will be refunded.
Levirdge gives them a Co-Ownership Agreement, which details all the terms.
Everyone happily signs them.
Kate and Jonah sign a Sale and Purchase Agreement that is conditional upon finance, due diligence, solicitors approval, building report, weather tightness report, registered valuation and LIM report.
All the paperwork is done within the two weeks needed to satisfy the Sale and Purchase Agreement. The reports are all received and both couples are happy with the results.
Bob and Mary pay the 10% deposit of $80,000.
Four weeks later - Bob and Mary pay the second and final 10% instalment – the property is settled.
Seven years later.
As it’s after 5 years, either couple is allowed to change or continue with the agreement they’ve made through Levridge.
The property is valued at $1,300,000.
Minus 4% to cover a standard real estate and marketing fee, the net value is $1,248,000.
The property is now in Kate and Jonah’s names. The Co-Ownership agreement confirms Bob and Mary’s interest in the property.
Kate and Jonah are ready to buy out Bob and Mary.
A second mortgage is also registered against the property in favour of Bob and Mary to protect their ownership.
Kate and Jonah get a mortgage to cover Bob and Mary’s initial $160,000 deposit, plus a further $224,000 which is Bob and Mary’s 50% share of the capital gain.
Kate and Jonah own 100% of their home.
Bob and Mary have $224,000 saved for their retirement.
We match hopeful first-home buyers with suitable property investors, so you can buy a house together.
As a buyer you get to choose when, what and where you want to buy. And a property investor gives you the deposit to make it happen.
As a property investor you get to choose when, what and where you want to buy. And once you’ve paid the deposit, the first home buyer is responsible for the rest.
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