PURCHASE PLUS IMPROVEMENTS MORTGAGE
Home renovation mortgage CMHC: So you’ve found the prefect home in the perfect neighbourhood, and it’s in your price range, however it needs some updating, TLC or some renovations. Consider a Purchase Plus Improvements Mortgage. Often, clients will use credit cards or lines of credit to finance home renovations. By adding funds for renovations to your mortgage at the time of your purchase, you can save thousands of dollars with your mortgage’s great rate. The additional funds borrowed are now a part of your overall investment, and you’ll be adding value to your home.
HERE’S HOW A PURCHASE PLUS IMPROVEMENTS MORTGAGE WORKS:
The home buyer makes an offer on the chosen property stating that it is conditional upon the purchase plus improvements insured mortgage. If you are not buying the home solely on the basis of being able to do the renovations, then you can submit the quotes up to 15 days before your closing date for approval. If you are unable to get someone in within the time frame of your conditional offer, then make sure to ask your realtor for an extra visit into the home at least 20 days before closing to obtain quotes.
Obtain the costs of the upgrades and then submit quotes to The Wilson Team, along with a list of improvements for the property, with cost estimates. The lender usually does not like to see the improvements valued at more than 10% of the house price but we can get exceptions.
Once the improvements have been approved, we wait until closing date. On closing there will only be one advance of funds and that advance is of the purchase price that was agreed upon with seller (purchase price). The funds that have been approved for the estimates of work that needs to be done stay at your lawyers (held back) until all the work is complete.
Once work is 100% complete, contact The Wilson Team and advise them. The Wilson Team will either require all the receipts totaling the cost of the quotes, or we can send in an inspector for $180 (we do not need receipts) just to confirm the work is complete.
The Wilson Team then will send the estimates of the inspection to the lender. The lender then notifies the lawyer to release the held back funds for the renovations so that the contractor (or you) can be paid. The funds are given to you, not the contractor.
THINGS YOU NEED TO KNOW:
- Funds are not advanced until the work is 100% complete. If your contractor requires payment prior to completion of the work, you will be responsible for paying for the improvements up front.
- The contractor that provides the quote does not have to do the work: you can hire someone else at a later date or after closing.
- The amount that is in the quote is the exact amount you will receive, therefore if the renovations end up costing more, or there is an unexpected expense, there is no possible way to get more funds from the lender, so you will be responsible for those extra costs.
- If the work cost less than expected you cannot send any funds back to the bank, therefore you can the extra funds.
- All the improvements must be 100% complete before any advance of funds. The lender does not do multiple advances.f
- Do not start other renovations or work in the home until the work that is on the quotes is completed and you have received the funds.
So you’ve found the prefect home in the perfect neighbourhood, and it’s in your price range, however it needs some updating...
Often, clients will use credit cards or lines of credit to finance home renovations.
We hope this information assists you in deciding if that perfect home that just needs some work is something that will fit into your dreams of home ownership.
Keep in mind these great advantages of a home renovation mortgage CMHC (Purchase Plus Improvements Mortgage):
- You’ve borrowed the funds for the renovations at a really great rate. Often, clients will use credit cards or lines of credit to finance home renovations. By adding it to your mortgage at the time of your purchase, you are saving $$.
- The additional funds borrowed for improvements are now a part of your overall investment, and you’ll be adding value to your home/
CONTACT US
Please keep in touch and let us know how things are going with your search. Please do not hesitate to get in touch with us if you have any questions along the way. We look forward to working with you during your home buying experience! Kelly Wilson kelly@wilsonteam.ca