Purchase plus Improvements Mortgage
Looking to buy a property that needs renovations? Will you need a mortgage that help you buy the property and cover the renovation costs? If you feel that you need financial guidance, give us a call today. We can help you understand the features of the Purchase plus Improvements Mortgage.
The Purchase plus Improvements Mortgage gives you a simple and affordable option to buy a fixer-upper. Several homeowners have been able to buy their new home and pay for the necessary renovations with just one convenient mortgage. They have also been able to do this with as little as a 5% down payment on the property. Are you aware of the steps you need to take further? Read on to find out.
5 steps towards your Purchase plus Improvements Mortgage
If you are a qualified buyer, you can borrow up to 20% of the post-renovation value of any home you have chosen, even with as little as 5% down payment.
Step 1 – You will need to obtain a mortgage pre-approval from your mortgage broker. This helps you determine the maximum approval amount.
Step 2 – If you find a house you are interested in, you must have a general idea of what renovations are needed as well as the cost of the renovations. The purchase price of the property and the renovation cost must not exceed your maximum approval amount. At this step, most lenders will request for written quotes to be provided, detailing all the work needed, as well as the cost. You will have to be prepared with all the costs worked out.
Step 3 – Once your offer is accepted by the lender, you can provide the accepted offer and the quotes for the work to be done to your broker. The broker will have the lender approved mortgage prices along with the cost of the renovations included in the mortgage. It should look like the following example:
Purchase price of the property: $350,000
Cost of all the renovations: $35,000
The revised purchase price: $385,000
Approved mortgage amount: $365,750
(Plus CMHC $13,167) $378,917
Step 4 – Once you take possession of your home, you can begin the renovations. The lender will instruct the solicitor to hold the renovation funds, until confirmation of the completed work. Once the renovations are complete, notify your broker. The broker will send an appraiser to inspect and verify if the work is completed as per the quotes provided.
Step 5 – The lender will receive an inspection report from the appraiser. This will validate that the work has been completed in a good manner, as per the earlier provided quotes. The lender will instruct the lawyer that they have released the funds to you. You can use the funds to pay the contractor and move into your home.
At One Mortgage Group, our mission is to set a high standard in the mortgage industry. We are committed to quality customer service - putting the people we serve first.
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