You have been looking at dozens of houses in the neighbourhood you desire but there always seems to be one or two major issues with each one that cause you to walk away and keep on looking. The last one you saw with your realtor had everything you wanted except for the 1970s bathroom with cracked tile, leaky faucets and a dingy old bathtub. It’s a deal breaker for you because the house is priced at the top of your budget and there is no money to renovate. Or is it? Of course, if you have enough of a down payment and the income to qualify, you may be able to add a line of credit to your mortgage and take care of it that way. But what if you don’t have that much down? The answer may be in the purchase plus improvements program. This option covers the sale price of the home plus any renovations that would increase the value of the property. Let’s say that the bathroom is going to cost you $15,000 to renovate. Using the purchase plus improvements program you would add the $15,000 to the purchase price and borrow up to 95% of that amount for your mortgage. In this scenario, based on current rates, the bathroom renovation would add $75 per month to the mortgage payment over 25 years all in one mortgage with one monthly payment! Here are a few important facts to know about the program:Ø The renovations cannot be strictly cosmetic in nature and must improve the value of the home (ie. flooring, bathrooms, kitchens etc)
There is an insurance premium payable on the total funds borrowed so the scope of improvements should be fairly significant
Depending on the insurer, the maximum improvements is the lesser of up to 20% of the as-improved market value or $40,000
A quote from a contractor is required to determine the cost of the renovations and this must be approved by the insurer/lender
An inspection report will need to be provided to the lender confirming that the quoted work has been completed before funds will be released to the borrower.
For more information, contact Ian Vowles, Best Mortgage Plan http://www.bestmortgageplan.ca/604-362-7526