Habitat for Humanity chapter pioneers new funding model

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The skyrocketing cost of housing in recent years has been putting the squeeze on Habitat for Humanity (HFH).

The not-for-profit, dedicated to helping families build strength, stability and independence through affordable homeownership, has been working in the Barrie area for the past 28 years. During that time, HFH Huronia has helped 50 families become homeowners, but CEO Rob Cikoja says the old funding model no longer works.

In the classic model, qualifying families were eligible to get into a home with zero-down payment provided they could demonstrate stable income and the ability to carry a no-interest mortgage without exceeding 25 per cent of their total income. HFH held the mortgage and the families were required to contribute 500 volunteer hours. Once the keys were handed over, the home belonged to the family, and if they eventually sold, any increase in value was theirs.

When the housing boom hit full stride around 2016, a family could conceivably buy a home for $300,000 then sell a couple of years later for $1 million.

“We were inundated with calls from sponsors saying that homeowners were cashing in,” says Cikoja. Rapidly increasing costs were making it nearly impossible for HFH to launch new building projects to expand the housing stock.

Cikoja came from a construction background, and had some ideas about how to make the system work better. Habitat Huronia pioneered a new funding model which was then made available to other affiliates throughout the province. Now, when families purchase a home, HFH goes on title with first right of refusal. If and when the home is sold, the organization can buy it back for the amount of the original mortgage. The homeowners receive a lump sum equivalent to all the mortgage payments they have made.

“For this to be successful, we needed to help them develop financial literacy – to learn how to invest and how to make their money work for them,” said Cikoja. “Financial wellness puts them on a path to a traditional mortgage and Habitat gets an affordable house back to help another family.”

Cikoja’s goal when he joined Habitat nine years ago was to scale up the pace of building to help more families. HFH Huronia has helped 11 families purchase homes in the past six years, including eight with the new funding model. When applications opened for the most recent build they received 700 applications in a week. Cikoja is encouraged that some local politicians are taking the problem of housing affordability seriously and looking for innovative solutions.

Habitat Huronia is continuing to explore new options including homes with a blend of conventional mortgages and zero-interest HFH loans, and a Critical Repairs Program that would help people make essential repairs to stay in their homes.

Cikoja said, “Every time we hand over keys to a family I say, ‘This is so worth it!’”

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