It’s no secret that finding a home in the current market can be tough and so imagine you find a great home in your ideal neighbourhood but there’s just one small problem… It isn’t exactly move-in ready and you don’t have the cash on hand to renovate it to your liking. This is where a purchase plus improvements mortgage comes in.
What is a purchase plus improvements mortgage?
According to a CMHC survey, almost 40% of mortgage customers didn’t know about the option of a purchase plus improvements mortgage so if you had never heard of this type of loan, you aren’t alone!
Essentially, your lender allows you to borrow additional funds on top of the purchase price to help you renovate your home or make any necessary improvements to make it move-in ready. The cost of renovating will roll into your one mortgage payment, making it easy to purchase your home and renovate it once the deal closes.
How do purchase plus improvement mortgages work?
Once you have found the home that you’d like to purchase, determine exactly what renovations you need, whether that’s a new furnace, kitchen renovation, a coat of paint or new floors. Then get a quote to get an idea of what the renovations will cost. We always recommend getting multiple quotes so you can be sure you are getting a fair price.
Once you have a quote, give us a call and let us know exactly what renovations you would like to do. We can then line up financing that includes the cost of the renovations.
After the sale concludes and you officially own the home, your lender will forward the agreed-upon cost of your renovations to your lawyer, who will hold that cash in trust. You can start the renovations right away, the work typically must be completed within 90 or 120 days.
Once your reno is complete, your mortgage lender will send a representative to take a look. Once approved, your lender will provide the money needed to pay your contractor.
What does this mean for you?
If you’ve found an almost perfect home but it needs some improvements to make it your dream home, don’t be discouraged. There are affordable options to allow you to not only renovate your home but also improve its value.
Give us a call today to see if a purchase plus improvements mortgage is right for you!