Frequently Asked Questions
General / Definitions
What is shared equity?
Shared equity is when an investor pays a portion of the purchase price of a property in return for a portion of the sale price of the property when it is sold at a later date. In Homers’ model the home owner also pays a small monthly dividend to the investor.
Who are your investors?
Our investors are large institutions, wealthy family offices and superannuation funds.
What is the Home Equity Share Agreement (HESA)?
The HESA is a legal agreement that governs the relationship between Homer & yourself with regards to the shared equity investment in your property.
What things are covered by the HESA?
The HESA covers a range of issues including but not limited to:
- The rights & obligations of both parties.
- The Investor Equity Reward component.
- The property purchase & sale process.
- The dividend payment.
The HESA is customised to match your individual circumstances but a copy of the HESA template will be available to you when you register with Homer.
What is the Investor Equity Reward component?
You have full control over the property including when it is sold. As the property investor doesn’t know, and has no control over, whether they will have to wait 5 years or 30+before the property is sold they receive an additional 2% equity in the property from the start.
Without this equity reward it would be impossible for Homer to find investors that would be willing to invest under these conditions.
What is involved in the approval process?
There are a number of steps in the approval process. Firstly you need to provide all the requested proof of identity documents and your financial information for obtaining the loan pre-approval.
You will then need pre-approval of your loan amount from your bank. If you choose to use one of Homers selected banks we will manage this process on your behalf.
What happens when I’m Homer approved?
Once you have completed all the steps approval process you will need to sign & return your HESA and pay the Homer Engagement Fee.
How Much is the Homer Engagement Fee and why do you charge it?
The Homer Engagement Fee is $7,000.
Homer is a business and we need to cover our costs as well as generate a return for our shareholders. But we believe that the engagement fee is set at a fair level for all concerned.
What does the Homer Engagement Fee cover?
The engagement fee covers the following:
- Provision of the HESA and other legal documents as required.
- The deposit bank guarantee.
- Support from Homers customer evangelist team to help you with any questions or issues you have when purchasing your home.
- Organising the investment from our investors.
The engagement fee covers a period of 6 months. If you have not bought a home in this period Homer is will allow an extension of a further 6 months free of charge but you will need to confirm that your financial situation has not changed since the HESA was signed.
What if I can’t find a property to buy or change my mind?
The engagement fee, minus a small administration fee, is refundable at any time prior to purchase, no questions asked and the HESA will be terminated.
Purchasing the Property
Who decides which property I can buy?
You do. Once you have been been approved by Homer you will be able to go and buy any property up to the purchase price cap set by Homer other than those types not permitted under the Homer scheme. The prohibited property types are:
- Buildings under construction.
- Properties outside the capital cities metropolitan area.
If you are in doubt about whether a particular property qualifies just contact our customer team.
How is the Purchase Price Cap calculated?
The purchase price cap is calculated based off the % of the property that Homers’ investors are prepared to buy and the amount of the loan that your bank has pre-approved for you.
How does Homer provide the deposit so I can purchase my property?
Once you have been approved by Homer you will be issued with a bank guarantee for the maximum deposit amount calculated as part of the purchase price cap calculation.
You will need to check with the selling agent that they are happy to take this guarantee in lieu of a deposit but we are confident that most if not all will be comfortable with this method.
Can I buy at auction?
You can only buy at auction if you have approval from Homer and a pre-agreement from the selling agent that they will accept a 5% deposit only.
Living in your Home
Renovations and modifications to the purchased property
You can renovate the home you buy with help from Homer. You must get approval from Homer if you want to do renovations that:
- cost $10,000 or more;
- need a building or planning permit; or
- involve a structural adjustment to the home.
Homer will decide how your proposed renovations will affect the value of your home. We then use this information to decide whether to approve your application to renovate.
You must not do renovations that reduce the value of the home. After your renovations your equity in the home must be the same or more than the equity you held in the home before the renovations.
What if I experience financial hardship or my circumstances change?
You must tell the Homer team and the bank that provided the home loan if you start to experience financial hardship. Talk to the bank about your options. You are protected under the National Credit Code.
Subject to certain conditions and completely at Homers discretion, our investors may be willing to take a larger equity holding in your property, including moving to 100% ownership. See our Changed Circumstances page for more details.
Can I move somewhere else and rent the property out?
No. The Homer scheme is for owner/occupiers only and you will be in breach of your HESA. If for whatever reason you wish to no longer live in your house you must contact Homer and organise to terminate your agreement with us as per the conditions in the HESA.
Can I rent out part of the house or list on sites such as AirBnB?
Yes as long as you continue to live in the house and have appropriate insurance cover.
Selling the Property
When can I sell my property?
You can sell your property after 5 years no questions asked. If you wish / need to sell your property in a shorter time frame you will be subject to certain penalties / conditions as outlined in the HESA that are aimed at protecting our investors.
Distributing the proceeds of sale
The net sales proceeds are what’s left after the costs of selling the home. The costs can include payments to the real estate agent, advertising agency and legal costs. After these costs are taken out, the remaining net sale funds will be paid out in the following order:
- discharge the home loan with bank who provided your home loan
- pay Homers proportional beneficial interest
- pay the balance to you.
Taxes & Government Assistance Schemes
First Home Buyers Grant
Homer has been designed to ensure that you do not miss out on the first home buyers grant if you would normally qualify for it. As this scheme can be changed by the government and is potentially different in each state you should seek your own advice as to whether you qualify.
Stamp Duty Discount & Concessions
As with the first home buyers grant we have attempted to ensure that if you would normally qualify for a stamp duty concession or discount then you should still qualify when buying with Homer. As each circumstance is different you should seek independent advice on this topic.