|Looking to Buy and Renovate? Help is at HandYou’ve found the home you love. The price is great and the area is ideal. Problem is, the kitchen and bathrooms need work. With closing costs and other expenses associated with moving, you wonder how you’ll be able to afford a renovation.There is an option. It’s the Purchase Plus Improvement Mortgage. You can buy your home and renovate it, and it all gets added to your mortgage with one easy payment a month at low rates.
This mortgage program is especially of interest to investors. Owners can mortgage up to four units with at least one unit as their principal residence.
These loans also consider the improved value of the home. For example, if you purchased a home for $200,000 and wanted $40,000 in renovations, you can likely get a mortgage for 95% of the improved value.
Funds are advanced at different stages of work. There are guidelines, and your mortgage professional will be able to help. Such mortgages are usually subject to a 10% holdback for 45 days after completion of work just in case of nonpayment.
To obtain a Purchase Plus Improvement Mortgage, you will need information about the following from your contractor:
Renovations: Description of the work; types of materials being installed, with applicable quantities; and total cost of all the work.
Additions: Description of the work; a copy of drawings; and a cost breakdown of all proposed work (for example, such items as excavations and foundations, framing, windows and exterior doors, electrical, interior painting, plumbing, and heating).
Guy Ward is a Mortgage Associate in Calgary, Alberta with TMG (The Mortgage Group Alberta).