Most home buyers apply for a mortgage for the price of their new home. Later, if they want to build an addition, or get new cabinets, or build an ensuite, they need to come up with a second source of financing.
But did you know that there’s a way to get a mortgage that pays not only for the purchase of your new home but also for the renovations you have planned?
It’s called Purchase + Improvements Mortgages. Here’s how it works.
As a homebuyer, you look at a few homes with your realtor. When you’ve chosen the best option, you make an offer and eventually settle on a final price. During negotiations, you also contact contractors about the renovations you have in mind and request quotes. Then, when you visit your mortgage broker, you bring both the purchase offer and the renovation estimate. We’ll find a lender who will finance both the purchase cost and the renovation cost.
For example, if you want to buy a home for $300,000 and you plan renovations totalling $20,000, we’d try to get you a mortgage for $320,000. The first $300000 would be advanced on possession date to pay the seller, and the remaining $20,000 would be held in trust with a solicitor until the renovations are inspected and confirmed completed.
Keep in mind that you’d still have to qualify under the usual lending guidelines for the full amount, and usually lenders requires the work to be completed within 90 days; however, in some circumstances this can be extended.
The Purchase + Improvements program works for new homes, too, if you need to finish the basement, build a patio, landscape the yard, or whatever.
It’s rare for a homebuyer to find the perfect home, one that has everything exactly as they want it. The Purchase + Improvements Mortgage program takes care of that. You no longer have to wait for the just-right home; now you can buy a good enough home and turn it into the perfect home.
This is just one option to make your potential new home everything you want it to be. We’ve had many happy homeowners take advantage of this program for many reasons, from small fixes to major remodels.
If this is something that interests you, contact us today about the Purchase + Improvements Mortgage program.