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Our Solution

Two families in Toronto that make $60,000 each are not qualified to acquire a reasonable mortgage separately. But together, the combined income of $120,000 helps them get a sufficient mortgage to buy a house.

They become co-owners for a while and this setup eventually helps both of them become separate home-owners.

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How It Works

Challenge :

The hot real estate market of Greater Toronto Area has become sufficiently out of reach for a common home buyer. The average annual household income in Ontario is slightly over $78,000 according to Statistics Canada, while the average house in GTA costs $730,000 (Toronto Real Estate Board).

A total mortgage this common person can get approved for is $350,000 and therefore he is short $380,000 of buying that average house. This is leading to people living as tenants in hope of a real estate market crash, which is nowhere to be seen. According to the most recent reports Toronto might see a slower growth in house prices but there would not be a reversal any time soon. Which is why we need a solution so that tenants can become home owners and stop perpetually paying someone else's mortgage while dreaming of having a house of their own.

Solution :

Two families in Toronto that make $60,000 each are not qualified to acquire a reasonable mortgage separately. But together, their combined income of $120,000 helps them get enough of a mortgage to buy a house. They become co-owners for a while and this setup eventually helps them to become separate home-owners.

The two families together would have a combined income of $120,000 and so together they could get enough of a mortgage to buy a house of $600,000. The 5% down-payment required is split between the two parties and each puts down $17,500 towards the house. Both parties will be listed on the title deed as home owners. They can mutually share expenses on 50-50 ratio or any other terms that they agree upon. They decide amongst themselves which party lives in which portion of the house. One party, which has higher prospects of becoming financially stronger is deemed as "Primary Tenant". The other is the "Secondary Tenant". After 1 year the house value would have increased by at least 10% and would now be $660,000.At this point the Primary Tenant who has become financially stronger can qualify for a larger mortgage and may buy the initial share of the Secondary Tenant, which will be $47,500 (initial down payment of $17,500 + half of the increase in house value which is $30,000). This settlement leads to Primary Tenant having the whole house to himself and the Secondary Tenant with a bigger down-payment for his next venture. The Secondary Tenant can now go on to buying his own house or entering into another "Two Partner Purchase" agreement.

The above example is just one scenario and there can be quite a number of variations of the solution. For instances the Primary Tenant and the Secondary Tenant can become 80-20 partners instead of 50-50. They can also split mortgage payments and the Secondary Tenant will be reimbursed in the end for his portion of the mortgage payments. Nevertheless we will further discuss the benefits and potential obstacles to this product keeping in mind the original example.

Benefits :

Primary Tenant's Benefits

  • Primary Tenant could not have been approved for the mortgage he required to buy a $600,000 house on his own. The two-partner purchase program allows him to buy this house and share the initial costs.
  • The initial investment increases by $30,000 in the first year.
  • Money is not being wasted on rent payments and is instead invested in a house.

Secondary Tenant's Benefits

  • Lives rent free for a whole year and saves money to buy own house.
  • Invested $17,500 at the beginning and receives $47,500 after a year.
  • Has a bigger downpayment for next venture ($47,500 + 12 months of rent saved).

Relevant News

News articles relating to the rising housing market and issues surrounding home ownership can be found below. Please explore these pages for further information.

How to co-buy a home with your friend in canada's expensive market

Read this Financial Post article about two families that bought a home together, which benefited them greatly. They stated in the article that "to buy something in our price range would've made us house poor"..

Read More

Co-ownership: One Way to Afford a Home

Similarly, a couple purchased a home with their mother so they could all get the home they wanted.

As co-ownership often isn't possible with a family member, let us help you find the perfect person or family to own a home with

Read More

Suburbs More Expensive Than Toronto Amid 'Extreme Shortage' Of Homes

Huffington Post article discusses the rising prices of homes throughout the GTA, it states that there is "a 'troubling trend' that is sending home affordability out of range".

These rising prices would make home co-ownership much more favourable to first time buyers

Read More

About us

TwoHomeOwners is striving to increase home ownership for ALL Canadians. Everything is about making homes more affordable for more people to buy, while somehow also making homes an investment that yield huge returns for the homeowners. The conflict of homes rising in price to get an investment gain while also trying to make homes affordable.

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