Co-op Housing: An Alternative Path to Homeownership


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With homeownership growing further and further out of reach for people throughout Canada, cooperative housing has reemerged as a more affordable alternative path to buying a home. Co-op housing provides another avenue for homeownership that you might not have previously considered. While affordability is the primary benefit of co-op housing, there are a variety of additional perks to this unique form of homeownership.

What is Co-op Housing?

Co-operative housing is an alternative form of homeownership that turns a multi-unit residence into a co-operative corporation, allowing buyers to purchase shares in the co-op corporation and reside in the home.

Think of co-op housing as a corporation or non-profit organization that owns your multi-unit dwelling. In order to live in this multi-unit residence, you must then purchase shares in the corporation. This makes you a shareholder in the corporation and allows you to reside in the home.

A board of directors is elected by their fellow members to run the co-op, with each member having one vote. The board of directors then handles the renovations, maintenance, security, and more for the co-op, outsourcing certain functions when necessary. All members of the co-op pay a monthly fee or housing charge which contributes to the costs of running the home.

This type of homeownership became popular in the 1970s and 80s when the government recognized the crisis of affordability and supply. Most co-op buildings were built during that time to address the housing crisis. Today, as residents continue to feel the pain of rising costs and supply shortages, co-op housing communities are on the rise. Co-op housing communities continue to reflect a diverse range of people and functions.

How Are Co-op Mortgages Different from Condominiums?

Co-op mortgages are different from condominiums in a variety of ways. The main difference is that with a condo, the buyer acquires ownership of an individual unit with a deed. With a co-op, the co-op corporation owns the property, and the buyer acquires the exclusive right to occupy a specific unit with a shareholder’s agreement.

Read our detailed breakdown of the difference between co-operatives and condominiums here.

What Are the Benefits of a Co-op Mortgage?

The main benefit behind a co-op mortgage is that it allows for a more affordable path to homeownership. Instead of having to take out a mortgage for an entire property, buyers can purchase their own portion of a multi-unit dwelling that fits their budget while still addressing their living requirements. While residents do have to pay an additional monthly housing charge on top of their down payment, these are typically reasonable, especially when compared to the cost of a monthly mortgage payment.

Also, due to the nature of how co-op housing is run, they are very democratic organizations. Each member has an equal say in how the property is run, thus contributing to an overall camaraderie and trust among residents.

The secondary benefit to living in co-op housing is the community they provide. These multi-unit homes function as micro-communities by offering support, companionship, security, and more. The benefits of creating these tight-knit communities within your own home stretch far beyond your finances.

Co-op Mortgages with Luminus Financial

Luminus Financial is proud to be one of the few financial institutions in Ontario that can facilitate financing for co-op mortgages. Our experienced mortgage professionals can handle both co-operative and condominium financing while also helping you understand the difference between both options.

To discuss which type of homeownership is right for you, call our mortgage professionals at 1.877.782.7639.

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