In short, OwnHome represents a new path to home ownership, through a structure that allows our customers to move into their dream home right away, without the typical 10-20% deposit. OwnHome is a rent-to-own model that fast forwards homeownership!
OwnHome will buy your dream home for you today, and give you the ability to purchase the property from OwnHome in the future. Lock in your monthly payments, lock in the OwnHome price (i.e. the purchase price) and stop paying off someone else’s mortgage.
Importantly, we give you the exclusive right to purchase the property, but you’re not obliged to do so. This is called an option (more specifically, a call option), and you can exercise it (i.e. decide to purchase the property) any time from the end of year 3 to the end of year 7. This is known as the exercise period.
OwnHome does not create a debt obligation for its customers.
Options have a strike price. This is the price at which someone can exercise the option. At OwnHome, we call this the OwnHome price. With OwnHome, the purchase price increases by 3.8% each year (or, to be more specific, about 0.32% each month). This rate doesn’t change, regardless of what happens to prices in the property market.
So, if we purchase your dream property off the open market for $1,000,000, then the OwnHome price at the end of the first year would be $1,038,000.
The purpose of this example is just to demonstrate the concept - as we’ll explain, you can only exercise the option once 3 years (36 months) have passed.
The result is that you have price certainty - no surprises! Once we purchase your nominated property, we will provide you with a schedule setting out, month by month, the OwnHome price for every month in the exercise period. This means you can plan in advance when you might exercise the option.
Each month, you pay OwnHome a monthly payment. This starts at 7.05% per annum of the price we pay for your nominated property. The 7.05% can be thought of as the sum of two components: a rent component and an option component.
7.05% is roughly equivalent to what you might pay if you were both renting and saving for a property of similar value.
Why do we say ‘starts at 7.05%’? Because this 7.05% tracks the OwnHome price of the property. So, as the OwnHome price increases by about 0.32% each month, so too does your monthly payment (remember, 0.32% per month is roughly the monthly version of 3.80% per annum).
Importantly, a portion of your monthly payment goes towards purchase offset. These are important, so they have their own section below!
With each monthly payment you'll grow your purchase offset. Each year, you accrue 2.5% of value of the property in a purchase offset, meaning that builds up the longer you’re with OwnHome.
The easiest way to think about this: each year, you pay about 3.50% of the purchase price as market rent and about 3.55% of the purchase price as options fees (totalling 7.05%), and accrue 2.50% of the purchase price in a purchase offset.
When you decide to exercise your option, your purchase offset balance represents an amount of the OwnHome price that you don’t have to pay us!
A quick example, with approximate numbers - imagine we bought your dream home off the open market for $1,000,000. After 5 years with OwnHome, the OwnHome price on that property would be $1,200,000. At this point, you would have accrued $150,000 in a purchase offset. This means you only need to finance $1,050,000! At the point you exercise the option, you would also need to pay stamp duty to the government for the transfer of legal title.
Remember we said that it was like renting and saving? Well, imagine your purchase offset as the ‘saving’ part, similar to a deposit.
Note: this purchase offset are not escrowed by OwnHome.
The purchase offset can only be used for the specific property OwnHome has bought in consultation with you. The default scenario is that, if you decide to walk away from your OwnHome arrangements, that purchase offset will be forfeited. We’ve included more information on what happens in this scenario under What happens if I can’t make my monthly payments? below. OwnHome does allow customers to sell their option subject to OwnHome approval of the person buying the option, and a platform fee (20% of the option sale price) to OwnHome to do the work to facilitate the legal transfer of this option.
There are 2 other payments to OwnHome you need to be aware of:
Firstly, there is a Starter Fee. This is equal to 1.5% of the value of the property value. You only pay this amount if your application with OwnHome is successful. This Starter Fee does not go towards your purchase offset, as it helps to cover the transaction costs we incur in acquiring the property, such as stamp duty.
Because we don’t know how much your dream property will cost until we buy it, we initially calculate this as 1.5% of the amount we approve you for. However, if the property we buy ends up costing less than that, we‘ll give you some back - enough that you only end up paying 1.5% of the value of the actual property.
This Starter Fee also has a cooling off period of 5 days in case you change your mind. Once this period is up, OwnHome gets to work on your behalf. If, after 3 months we have not successfully put you in your own home, we give you the Starter Fee back, minus anything we spent on building, pest and strata reports during those 3 months (costs which we will have asked your approval for).
Secondly, there is the Settlement Payment. You pay this once we have purchased your dream home off the open market. This is equal to 1% of the value of the property value. However, unlike the Starter Fee, this turns into your first 1% of purchase offset!
Example: OwnHome approves you for a $1,000,000 property, so you pay OwnHome $15,000 as a Starter Fee. OwnHome is able to purchase your desired property off the open market for $1,000,000. Once the sale to OwnHome is complete, you contribute a further $10,000 as a Settlement Payment - immediately, your purchase offset balance is at $10,000!
From then on, you’re just paying your monthly payments.
In limited circumstances, OwnHome may allow you to sell your option. If this occurs, OwnHome will charge a facilitation fee. More detail on this is included under What happens if I can’t make my monthly payments? below.
OwnHome covers transaction costs incurred when OwnHome purchases your dream property off the open market. This includes stamp duty and conveyancing fees. When you exercise your option and purchase the property from OwnHome at the end of our relationship, you will need to cover stamp duty and other transaction costs at that time. More detail on this is included below under Are there any other amounts I need to cover?
No. OwnHome is not a lender, and you are not obtaining a mortgage or any other form of loan.
Further, OwnHome is not a credit provider, and our arrangements do not constitute a credit product under the National Credit Consumer Protection Act 2009 (Cth).
While OwnHome is not a lender, we have developed consumer policies based on those that you might see from credit providers. This includes a hardship policy, an arrears policy, and our own ‘Going Above and Beyond Policy’ which sets out ways we will try to help customers in a range of life circumstances.
If you do find yourself in financial hardship and are an OwnHome customer please get in touch with us early - we’re here to help you, and we want to ensure you’re in the best position to become a homeowner.
Even if you have already saved for a deposit, OwnHome might still be able to help. The most common scenario would be if you’re not happy with the loan amount that a lender has approved you for. If your dream home is a little out of reach using this traditional path, OwnHome might be able to offer you an alternative path that gets you into this dream home and save for a larger deposit.
You could then take a bit more time to save up and get qualified for a higher loan amount, then buy the home back from OwnHome when you’re ready. You could think of it as a home ownership boost in this situation.
Put simply, we make money from the monthly payments, which is enabled by the appreciation of the property during the period that we own it, and from the Starter Fee and Settlement Payment.
Having said that, this isn’t all profit by any means. We have various costs, including the cost of borrowing the funds necessary to purchase the properties, land tax, and transaction costs (which is mostly stamp duty). We also have a range of operating expenses, including building the technology that supports our seamless home ownership experience
The money we make from our arrangements allows us to keep doing what we do, which is turning more renters into homeowners.
We see OwnHome as a great stepping stone to a mortgage, not a replacement.
A mortgage loan is how most Australians buy their home. However, they require hefty deposits, closing costs and approvals from third parties (banks, appraisers etc). When the time comes for you to secure a mortgage and purchase the property from OwnHome, we’ll be here to help.
Title to the property
With a mortgage, you hold legal title to the property. However, the bank (mortgagee) typically has security over that property. Among other things, this gives it the right to initiate foreclosure in the event you don’t meet your repayment obligations.
With the OwnHome path to home ownership, OwnHome retains legal title. However, as the customer, you have a contractual right (through the option) to purchase the property at the pre-agreed OwnHome price, for which you can use your purchase offset.
If you decide not to exercise the option, or default on the monthly payments, OwnHome does have the right to terminate our arrangements. In this case, the default outcome is that you will forfeit the purchase offset. However, as outlined under What happens if I can’t make my monthly payments? and What happens if being a homeowner is no longer a priority? OwnHome may permit you to sell your option to another person, subject to OwnHome’s requirements (including approval of the buyer). This would allow you to realise the value from your monthly payments to date.
With a mortgage, you have ‘equity’ in the property. This represents the difference between the loan size and the market value. So, if the value of your property increases while you have a mortgage, then all things being equal, your equity in that property will grow accordingly. If the market (and the value of your property) drops after you’ve purchased a property with a mortgage, your equity will be hit first. Under typical mortgage arrangements in Australia, banks have recourse to your other assets if you foreclose on your mortgage.
With OwnHome you realise all of the market growth upside above the locked-in purchase price growth of 3.8% per annum. Of course, this is on the basis that you exercise the option and purchase the property from OwnHome. In the event that the market declines since you entered into the arrangement with OwnHome, the purchase price still increases at a rate of 3.8% per annum.
Being with OwnHome has similarities to a traditional rent and save scenario. However, there are a couple of key benefits that our customers are excited about.
With OwnHome, you get to live in your dream house (and, subject to some reasonable limitations, customise it) from day 1 until the day you can go and get a mortgage. No more removalist fees, rental inspections or unexpected increases in rent. The home you choose is the home you can purchase.
You also get your feet on the property ladder - unlike with renting, increases in the value of the property you’re living in benefit you! Specifically, property value growth above 3.8% per annum is entirely yours (if you exercise the option). This won’t affect the raw size of the loan you need when you exercise the option, but it will affect the Loan-to-Value-Ratio (LVR) (i.e. what proportion of property you will own once you do get a mortgage).
In saying this, a core value of OwnHome is transparency.
We designed OwnHome so that your monthly payments would feel much the same as renting and saving. However, in many situations, using OwnHome is slightly more expensive on a monthly basis versus renting and saving. There’s also the possibility that the market value of the property won’t increase by 3.8% per annum. If the property market does not increase by 3.8% per annum, using OwnHome represents an incremental cost as against renting and saving. If this happens, you will have still had the benefit of living in your dream home for the duration of your time with OwnHome.
In choosing 3.8%, we were guided by the history of Sydney’s property growth, and only 20% of purchase years over the last 90 years saw 5-year growth rates of less than 3.8% per annum.
Having said that, we do want to remind you that past performance is not a reliable indicator of future performance.
Anyone who wants to own a house in the future should apply here. We’ll let you know within 24 hours if we think you’re a good fit for our current focus.
Please note that OwnHome is only available for those looking to occupy this property - i.e. OwnHome is not currently available for those trying to buy an investment property.
OwnHome currently operates in Sydney, NSW. OwnHome’s focus in the early years will be the Greater Sydney metropolitan area. Once well established, OwnHome will serve the greater metropolitan area of Sydney, before taking on the rest of NSW.
Ultimately, OwnHome’s mission is to transform home ownership globally, and become the trusted partner in facilitating this rent-to-own pathway to home ownership.
Working with OwnHome is quite simple and looks like this:
Our pre-qualification process is rigorous, and involves two main stages.
When you first apply, we’ll calculate your approximate purchasing power using the information we have gathered and some commonly used industry benchmarks. This purchasing power will be set at a level that ensures you can (1) comfortably make your payments; (2) build up enough purchase offset in the property, and (3) obtain a mortgage in 3-7 years to exercise your option over the property.
After our discovery chat, you can expect to receive an email from us. In this, we’ll request a pull of 12 months of your banking transaction data, which enables us to do a deep-dive into your historical income, spending habits and other payment obligations. OwnHome partners with XAI Validate to undertake this process intelligently and quickly, and it allows us to make a much more accurate determination of your purchasing power.
We will also ask for a copy of your credit report, or for permission to obtain one ourselves.
There’s a chance we might ask you some follow up questions about your spending habits or credit history. This shouldn’t be a cause for concern. The OwnHome process is a big commitment for you and us, so it’s important that we really know each other before we kick off.
There is no application fee per se. However, there are initial costs involved with using OwnHome. See Are there any other payments involved above for full information on the cost of using OwnHome.
Most move-in ready properties that are on the market and in our focus suburbs are eligible for the OwnHome program. However, there are also some specific eligibility criteria:
1. Maximum price: In Sydney, this is $2,100,000.
2. Type of home:
3. Size of home: The property must be greater than 50 square metres. This is because it is much more difficult to obtain a mortgage for properties that are smaller than this, and we don’t want you to be in a position where you can’t exercise your option over your dream home.
4. Condition of home: We want your home to be in great condition before you move in. When home shopping, there are a few warning signs that a home may not be in the best condition and wouldn’t pass OwnHome’s inspection. Look out for some tell-tale warning signs on the listing:
As always, if you have a question on this, reach out to us directly - we’re here to help!
The home inspection is a critical part of the home purchase process. We want to make sure that the home we buy is appropriate and free from major defects and issues. A responsible purchaser will typically obtain a Building & Pest Report, and if the property is a strata unit, a Strata Report.
Where we make an offer via private treaty, we will seek to make the contract conditional upon these reports being obtained and not revealing any significant issues. The inspectors whose services we use are qualified, well trained and have appropriate insurance in place. Where we agree to bid at auction, we will obtain these reports in advance.
Either way, we want to make sure the home you choose is up to scratch!
If an issue is discovered during the inspection process, OwnHome will (1) determine whether the issue can be remedied, and (2) if so, how much this will cost.
If an issue is significant or cannot be remedied, OwnHome will not proceed with an offer or bid. If the issue is relatively straightforward and can be remedied, OwnHome may proceed. OwnHome’s preference is always that the vendor remedy any issues prior to settlement.
Rest assured that we won’t make these decisions behind closed doors - we’ll always keep you abreast of what is happening!
It’s pretty simple - once you get your keys and move in, you get to start acting like a homeowner! You make your monthly payments, and your purchase offset starts growing.
The rest is up to you. One key benefit is that, by using OwnHome, you’ll have a great understanding of how the property purchase process works. If you’re really pro-active, you can start planning towards your exercise of the option, and do some research into the mortgage process.
Otherwise, you can sit back and get on with your life. No more dealing with stubborn landlords or moving every 18 months.
Great question! In short, if they’re reasonable, won’t destroy the property or its value and comply with any local rules and regulations, then yes. Our Lease and Option Deed have a bit more detail on this, so we can talk through it once you get your application rolling.
Like we said, we want you to act and feel like a homeowner. Hang paintings, paint walls, even chart your kids’ growth in the doorframe! If you find yourself wanting to do something major (e.g. that would need development approval), just get in touch. We’ll take a look and put a plan together.
If it’s up to us, that’s a hell yes! This is your home after all, and we love our owners to have their furry friends involved.
Unfortunately, it’s not always our call. Many buildings will have rules, and some of these may expressly prohibit pets. Having said that, we should be able to get this information in advance, so you’ll know this before deciding on a property.
(And at the end of the day, we’re pet lovers. If you find yourself in a tough situation with a building manager or similar, get in contact with us. If we can, we’ll put our resources to work)
You are free to exercise the option anytime during the exercise period (i.e. from the end of year 3 until the end of year 7).
We’ll need about two weeks’ notice to get things in order at our end. But the earlier you let us know, the more we can help you with this process.
See What do I pay to purchase the property? above.
At this stage, no. OwnHome is not a credit provider, so we don’t provide you with a mortgage or financing. However, we can help you out with this and assist you to be in the best place possible to obtain a mortgage when the time comes.
We’re not interested in ‘hair trigger’ default events. For example, if your financing falls through at the 11th hour at the end of the exercise period, we’re not going to boot you out. OwnHome is focused on helping you become a homeowner, not tripping you up on technicalities. In these circumstances, we can enact our Hardship Policy, and make a plan for how to get you into your home as soon as possible. If this happens, we’ll look to extend the deadline - you’ll get more information on this point once you’ve applied for OwnHome and been accepted.
If the property qualifies, yes. Most of these programs have price cutoffs where the benefits disappear.
Therefore, your ability to rely on these benefits will depend on the price at which you buy the property back from OwnHome. For example, in NSW, the first home buyer assistance program cuts out at existing homes worth more than $800,000. Sadly, this probably won’t get you very much in Sydney.
Your first step will probably be to get pre-approved from a traditional mortgage provider. When the time comes, we would love to do what we can to make this as smooth as possible.
Once you’ve been pre-approved by a lender, just let us know! Get in contact with us via phone or email, and we’ll get things moving.
There won’t be any other decision makers in the process. We strongly recommend that, just like any other home purchaser, you have your own lawyers and conveyancers to assist you with the purchase from OwnHome.
Remember, just like a typical purchaser, you will be responsible for the fees on any advisers you use (e.g. conveyancing) when you buy back the property.
Yes. As it stands currently, the purchaser of a property in NSW must pay stamp duty on the value of the property. Unless that changes between now and the time that you exercise your option, you will have to cover this stamp duty at the point of exercise.
Depending on how the market has grown, you may also need to think about lenders mortgage insurance. This will depend on how much you need to borrow as against the market value of the property. Depending on the circumstances at the time, your mortgage provider may require that you cover this too.
OwnHome has a dedicated Hardship Policy for this exact scenario. Our goal is to ensure that all our customers end up as homeowners, but we understand that sometimes circumstances change.
Once a customer activates the hardship process, we’ll follow a clearly laid out path. In short, we assess the customer’s financial circumstances to understand what has changed, and how we can help the customer chart a path out of their difficulty. Unfortunately, there can be circumstances where we’re unable to continue the customer’s arrangements with OwnHome.
The last thing OwnHome wants to do is profiteer off any misfortune that befalls you. We have policies and processes in place to deal with this exact situation. In short, our goal will be to help the customer realise value from their purchase offset by assigning / selling their option. We’ll only be able to facilitate this where the incoming ‘assignee’ passes our checks, so they’ll need to be someone who could have otherwise qualified for OwnHome. OwnHome would also take a platform fee for facilitating such a transaction.
More detail on this situation is provided once you sign up and get approved with OwnHome.
OwnHome customers can walk away from their option. No impact on credit history, no lender coming after assets. So, if your circumstances change during your time with OwnHome (e.g. you get a job offer in New York, so won’t be living in Sydney), you always have the option to leave. You will forfeit your purchase offset, but can seek to sell your option subject to OwnHome approval.
However, we’re well aware that our customers will be putting their hard earned money towards OwnHome. In situations like this, the last thing we want is to be the cause of you giving up such a great opportunity.
Our Above and Beyond Policy caters to these types of situations. In a similar way to those involving hardship, OwnHome will seek to facilitate an assignment / sale of the customer’s option, subject to a strict ‘assignee’ qualification process and a platform fee.
More detail on this situation is provided once you sign up and get approved with OwnHome.
See What are my monthly payments? and Are there any other payments involved? above.
No! OwnHome handles land tax on the property for the duration of your time as a renter. OwnHome recommends that you obtain renter’s insurance.
No! OwnHome will cover all strata fees.
OwnHome is responsible for substantial repairs necessary to keep the home habitable, such as general maintenance, structural issues and roof repairs. OwnHome customers also have more flexibility than your usual renter to make upgrades and renovations to the home, subject to a few qualifications - see Can I do repairs and renovate? above.
The general position is that, just like mortgage payments for a primary place of residence and rental payments for a renter, monthly payments are not tax deductible. As always, you should always seek your own independent advice on any tax matters, like using a portion of the home for a home office.