Imagine you have found the home you want in the perfect neighbourhood all at a great price. The problem is… After the 5% down payment and other closing costs you will be unable to afford the improvements needed to make the house your HOME.
We may have your solution!
A Purchase Plus Improvement mortgage may be for you.
What is a Purchase Plus Improvement mortgage you ask?
This is a mortgage where you will get the funds required to purchase the property AND the fund required to make the improvements need as well.
How does it work?
Example: Home Price – $275,000 | Improvement Cost – $25,000 | Total $300,000
1. You must qualify for the full $300,000 mortgage
2. Together we provide the lender and CMHC (if less than %5 down payment) with a professional estimate of the improvements to be done.
3. On the day of closing the full $300,000 will be forwarded from the lender to your Lawyer. Your Lawyer will send $275,000 to the sellers lawyer and hold the $25,000 for the improvements in his/her trust account.
4. You then have approximately 90 days (exceptions to 90 days can be made) to have the improvements complete. You will be responsible for the any costs incurred until the improvements are complete.
5. When the improvements are complete an appraiser will sent out to your property to confirm for the lender that the improvements have been completed as laid out in the original estimate.
6. The appraiser will notify the lender that the improvements are in deed complete.
7. The lender then notifies your lawyer that your $25,000 can be released. Your lawyer will contact you and either you will go pick up your cheque or the lawyer will mail it to you.
NOTES:
A) Although you will need a professional quote for the lender to get the approval, a professional contractor is not required to complete the work. If you are handy and want to take on all or some of the project(s) yourself, you can.
B) The improvements have to increase the value of the property by the same or more than the amount of money required to do the work. The lender and/or CMHC have complete control over estimated increase in value to your property. If the lender or CMHC believe the improvements are of a lesser value than the quote we will simply get a reply stating that you will only have for example $20,000 instead or the $25,000 in the quote. The decision to continue or not is yours
C) The maximum value of the improvements can not exceed 20% of the purchase price.
If you have any questions as to what improvements will bring value please contact me and also ask your realtor.
David Lloyd
613.449.0579
david@greatratemortgages.com