You have been on the hunt for the perfect home and you have nearly found one. The location is great, the layout makes sense for you and your family, the home is structurally sound, all of the amenities are close by, and to top it off, the price is very attractive. Only one problem, the home is extremely outdated! The appliances are a century old, the counter tops are worn out, the tiles are cracked, and the basement is unfinished. So what do you do from here? Most people will just move on to the next home. Others will see an opportunity to turn this dull outdated home into their own vision. What are your options? Renovating a kitchen can cost upwards of $15,000 and once the kitchen is completed, do you just leave the rest of the home in its out dated state? How does one finance the renovations? Do you use your credit cards or lines of credit?
The best option in this scenario is the Purchase Plus Improvement Program. It helps to make home shopping for buyers a lot easier knowing you can renovate your home immediately after taking possession of the property. The great thing about this program is it can all be done with one convenient mortgage and only 5% down.
The Purchase Plus Improvement Program provides the opportunity to make improvements to the home and allows the home buyer to borrow against the improved value of the property. The improved value is determined by the market value of the property after completion of the improvements. On a typical Purchase Plus Improvement mortgage you can borrow up to the lesser of 20% of the property lending value or $40,000. Purchase Plus Improvement mortgages are available for both conventional and high-ratio insured mortgages.
The benefit of this particular mortgage product is that it allows one to consolidate their renovation debt within the mortgage, rather than using personal loans or credit cards. The interest rates on personal loans and credit cards are usually higher than the interest rates on mortgage products. This means you will save money by having a lower interest rate which you could then use to put towards savings or paying off other debt faster.
How does the Purchase Plus Improvement Program work?
When you are applying for this mortgage, you will be required to submit a detailed list of improvements including copies of contracts and estimates. When the mortgage funds the solicitors are instructed to hold back the cost of improvements; you will have 90 days to complete the improvements on the property. Once completed, an inspector will confirm the work has been done and your solicitor will release the funds for you to pay the hired contractors.
How do I apply for a Purchase Plus Improvement Mortgage?
Applying for this mortgage product is similar to applying for a regular mortgage product. The only additional paper work needed would be the quotes required for the renovation. For more information regarding the Purchase Plus Improvement Program or to find out if this product is right for you, please contact me for a free consultation.
Jas Gill is a Mortgage Specialist with Dominion Lending Centres Leading Edge. Cell: 604-362-2022 Website: www.jasgillmortgage.ca E-mail: Jgill@dominionlending.ca