FundMyHome works because developers only receive 80% of the home price upon sale. The balance of 20% is only earned at the end of Year 5, provided the home price appreciates by 20%. Otherwise, the developer forfeits the 20%.
That 20% is set aside to pay a fixed 5% interest rate to institutional investors over the 5-year period,acting to incentivise them. Without a fair return, it would not be possible to attract investors to fund 80% of your home.
In short, the first 20% of capital gains paid to the developer at the end of Year 5 is a repayment of their 20% set aside upon sale of the home in order to pay the 5% interest rate to the investors. Developers will never get more than the original selling price of the house. Instead, they risk losing up to 20%, even if the house price stays unchanged.
FundMyHome aligns the interests of developers and homebuyers such that developers are incentivised to uplift the value of your property.