Are you one of those who thinks that new is better than used? When it comes to housing, you can build your own or join a housing cooperative to have your new home.
You probably already know more or less what a housing cooperative is, but do you really know how it works and everything that being a cooperative member entails? Let's take a look!
What is a housing cooperative?
You probably already have an idea of what a housing cooperative is. Just in case, let's define this concept a little further.
A housing cooperative is a non-profit association that brings together a group of people who want to buy a house at a price below the market price.
This reduction in cost is achieved by acting as a developer and the contractor of the property, eliminating the role of the real estate developer and their benefits. In exchange, what is usually hired is a housing cooperative manager, who guides the cooperative members during the process of purchasing the land and the construction.
Characteristics of housing cooperatives
Now that you have a clear idea of the essence of a housing cooperative, let's look at its basic characteristics in a little more detail:
It is a non-profit corporation. Its objective is to build houses at cost price, without making a profit from it.
? It operates on a free membership, voluntary withdrawal basis and operates democratically. Each member has one vote.
? The partners are the ones who decide. As it is a company, the partners decide everything related to the house, from its qualities to the plans presented by the company in charge of building the houses.
? The cooperative members are partners of the cooperative and co-owners, as well as recipients of one or more of the homes that are built.
? Members can participate in the cooperative's governing bodies, making everything more transparent.
Who can be a member of a housing cooperative?
Anyone can become a member of a housing cooperative as long as they meet the requirements established by the cooperative's statutes. This includes both natural persons, i.e. private individuals, and legal persons, such as entrepreneurs and companies and even other cooperatives. Easy, right?
From there, the law distinguishes between cooperatives where everyone is an individual and those that include companies and entrepreneurs and other cooperatives or communities of property . The minimum number of people to form a cooperative with only savers is at least three partners, while only two are needed when other cooperatives are included.
How to create a housing cooperative
Setting up a housing cooperative on your own or being one of the founding members is not the most common thing to do. The normal thing is to join an existing cooperative as a member that has already taken care of the main formalities.
In other words, the company must have a statute, have already found the land on which to build and even have the company that will be in charge of the works. In this way, you will only have to join the project if you are convinced by what you see.
Advantages of being a cooperative member
Why should you join a housing cooperative? The main advantages of this model are:
The price of the house will be lower because the cooperative does not seek to make money from the homes.
You will have a say in all decisions regarding the building and its qualities.
In some cases, you will be able to customize the home (always within certain limits).
They can help you with the mortgage, although this will depend on the cooperative manager you hire.
? You will get to know your neighbors before you move in (for better and for worse).
And what about the disadvantages? The housing cooperative model is not without its risks. The first is that you will have to wait to have the property , because a house is not built overnight.
Furthermore, depending on when you become a member of the cooperative, the construction and delivery of the home can mean years of waiting.
Finally, joining a housing cooperative is easier than leaving. Depending on the bylaws, to leave the project you may need to find another member to take your place.
How a cooperative works
The basic operation of a flat developer is simple:
1. Members join in the order they arrive and choose an apartment in that same order (there will also be more expensive apartments than others depending on size).
2. Key decisions are made at the General Assembly , where members examine the cooperative's management and annual accounts.
3. There is a Governing Council , which is the governing body and will ensure that the cooperative's statutes are complied with.
4. If there is a cooperative manager , which is the most common, he or she will be in charge of setting up the entire project and managing it.
As for the project steps, the partners provide an initial capital and then make periodic contributions that will cover between 20 and 25% of the price of the house. The rest will be financed through a financial institution with a developer loan to which the money will be returned upon purchasing the house and signing the mortgage.
In other words, to buy the house you have to pay off the developer loan and that is done with the mortgage.
What happens with the mortgage in a cooperative?
The properties in a housing cooperative are also purchased with a mortgage . The difference with other types of purchase is that there will normally be a developer loan with a mortgage to offer you.
The most common thing is that the cooperative manager negotiates with the financial institution that granted the developer loan a mortgage to offer to its cooperative members. As a member you can subrogate the developer's mortgage , that is, join it.
Of course, you are not obliged to do so . You are free to choose the mortgage you want for your cooperative apartment.
Which is usually the best option? A developer mortgage or a new mortgage? The truth is that there is no universal answer . Developer mortgages usually have advantageous conditions, but you can also find a loan with better conditions on your own if your financial situation is good.
Similarly, you may be interested in a mortgage without associated products. In the end, it is about analyzing your options according to your preferences and your situation to find the ideal mortgage for you.