Many times, when you’re looking for a new home there is something that needs to be changed – flooring, roof, cabinets, paint colour of the rooms, etc. Home owners are also worried that they will not have the money to make these changes after they factor in a down payment, property transfer taxes, and the other closing costs involved in a home purchase.
Are you interested in making minor refurbishments to a newly purchased home?
A purchase plus improvements mortgage is available for just this situation. On a typical purchase plus improvement mortgage you can borrow up to 10% of the initial value of the property up to $40,000. Purchase plus improvement mortgages are available for both conventional and high-ratio insured mortgages.
How does a purchase plus improvements mortgage work?
When applying for your mortgage you will be required to submit a detailed list of improvements, including a copy of contracts outlining the scope of work and cost estimates. When your mortgage funds the Solicitor is instructed to hold back the cost of the improvements until release of funds until the improvements are completed. You have 90 days to complete all the improvements and once finished an inspector will confirm the work has been done and your Solicitor will release the set aside funds to you.
Why might a purchase plus improvements mortgage make sense?
With the new mortgage rules you are no longer able to refinance unless you have 20% equity in your property. If you are purchasing a home with less than a 20% down payment and plan to make renovations or improvements you probably won’t be able to refinance for some time, so it might be advisable to make the improvements right away and take advantage of a purchase plus improvement mortgage.
How do I apply for a purchase plus improvements mortgage?
Applying is no different than a regular mortgage outside that you will need to obtain quotes for the work required. If you are wanting to take advantage of this program discuss with your REALTOR to ensure you allow enough time in the subject removal to arrange for contractors and/or companies to come in and provide quotes for the work required.Apply Now
More questions about purchase plus improvement mortgages? Contact me anytime.