Humber/Ontario Real Estate Course 3 Exam Practice

What is accurate concerning an equity housing co-operative?

1. A buyer can easily secure a mortgage for an equity housing co-operative unit.

2. A unit in an equity housing co-operative must be paid for in cash.

3. A mortgage for this co-operative type is typically a blanket mortgage.

4. Financing for an equity co-operative unit mirrors that for a condominium unit.

The correct answer is: A mortgage for this co-operative type is typically a blanket mortgage.

When evaluating the nature of equity housing cooperatives, it's important to understand how their financing works. In an equity housing co-operative, residents do not own individual units as they would in a traditional condominium. Instead, they buy shares in the cooperative, which give them the right to occupy a unit. Typically, to finance such a co-operative, lenders may use a blanket mortgage. This type of mortgage is secured against the entire property rather than individual units. It allows the co-operative to take out a loan as a whole entity, which then helps fund the purchase and upkeep of the entire building, and the individual shareholders benefit from this financing model. In contrast, securing a traditional individual mortgage for an equity co-op unit is often more complicated due to the nature of ownership. Therefore, options indicating that a buyer can easily obtain a mortgage or must pay in cash do not accurately reflect the situation. The financing structure for this type of co-operative differs from that found in condominium arrangements, thus also impacting the overall financing options available to potential buyers.