Finding the perfect home sometime means encountering properties that need a bit of TLC. For those homebuyers, the solution lies in a ‘purchase plus improvements’ mortgage. The purchase plus improvements mortgage allows you to buy a home and include the cost of immediate renovations of up to $40,000 in your mortgage, rather than depleting your savings or relying on credit cards.
How It Works:
1. Estimate Renovation Costs: Once you’ve found your potential home, obtain detailed, written quotes from licensed contractors for the intended renovations.
2. Appraisal: An appraisal is required to determine the property’s current value and its projected value post-renovations.
3. Financing the Dream: Your lender will add the estimated renovation costs into your mortgage. For instance, with a 5% down payment, you could finance up to 95% of the home’s ‘as improved’ value, which is typically higher than the purchase price.
4. Release of Funds: The mortgage amount is advanced to your solicitor, who holds back the renovation funds until the work is completed and inspected. Post-inspection, the funds are released to cover the renovation costs.
This approach not only makes financial sense but also offers a practical pathway to customizing your home to your preferences. Plus, you can utilize pre-payment privileges to pay off the renovation costs faster.
Got questions? Speak to the experts at MiMortgage.ca to understand the process for purchase plus improvements and options available for your unique circumstances. With the right plan, your fixer-upper can quickly become the home of your dreams. Remember, this strategy is about more than just buying a house; it’s about creating your ideal home in a financially savvy way.
