A Purchase Plus Improvements mortgage is a fantastic option that many lenders offer. This type of mortgage allows buyers to not only purchase a property but also access additional funds to complete renovations and create their dream home. With this type of mortgage, you can finance your home improvements into your mortgage and build your dream house, all with one manageable mortgage payment.
If you are looking to buy a home and fund renovations, a purchase plus improvements mortgage works in your favour, and it is a great option for you to consider. Let John Antle assist you in exploring your options and finding the best solution to achieve your home renovation goals. Let’s work together to turn your dream home into a reality.
The Canada Mortgage and Housing Corporation (CMHC) Purchase Plus Improvements program allows you to borrow up to 10% of the “as improved” value of your home. For example: If you buy a home with a purchase price of $300,000 and the renovations will improve the value of the home by $30,000 your home will be worth $330,000 after the renovations are completed. Therefore, you could borrow $33,000 or 10% of the improved value of $330,000 to cover improvement costs.
No, Purchase Plus Improvement mortgage approval requires that a certified contractor be hired to complete the renovations on the property.
The process is as follows: It is a requirement for you to receive a quote from a reputable contractor to be submitted to both the lender and CMHC (if applicable) for approval. This will specify the work being completed on the property. Not all renovations you may wish to have done will necessarily be approved by the lender. If your proposed renovations are accepted, you will then have your mortgage approval revised to reflect the new total cost.
Generally, the lender will consider approval for renovation funds that are significant and will involve the structure of the property. A good example is a new kitchen or a new roof. Adding a basement suite or replacing a furnace may not be mortgage approved.
No, anything that is not affixed to the principal residence and could be removed would not be approved by the lender or CMHC.
When the purchase is completed the lender will forward the dollar amount you are borrowing for renovations to your lawyer. The lawyer holds these funds “in trust” until the renovations are complete. Then an appraiser will view the home and provide a report to the lender confirming the renovations have been completed and will reference the original quote. Next, the buyer will receive the renovation funds to pay the contractor for the work that is completed from the lawyer. Since CMHC and the lender will require the work to be completed prior to release of funds, you may be obligated to pay the contractor a deposit or progress payments. Talk to your mortgage broker about options to assist with these payments in addition to your mortgage payment.
One of the biggest advantages of a Purchase Plus Improvements mortgage is that it allows you to customize your new home to fit your specific needs and tastes. You can use the funds to renovate the kitchen, add an extra bedroom or bathroom, or update the flooring. These upgrades can increase the value of your home, making it a smart investment for your future.
Another benefit of this type of mortgage is that you don’t have to worry about taking out a separate loan or using your savings to pay for renovation costs. Instead, you can include the cost of the renovations in your mortgage, and spread the payments out over a longer period of time.
Overall, a Purchase Plus Improvements mortgage is a flexible and convenient option for those who want to create their dream home without breaking the bank. Our team of experts can help you explore this option further and determine if it’s the right choice for your unique situation.
As your trusted mortgage broker in Kelowna, John Antle is committed to making the home buying process as seamless and stress-free as possible. We understand that purchasing a home can be one of the biggest investments you’ll make in your lifetime, and we’re here to guide you every step of the way.
Unlike traditional financial institutions, we offer alternative lending solutions that cater to your unique needs and circumstances. With Purchase Plus Improvements mortgage options, you can finance both the cost of your new home and the renovations you want to make all in one mortgage. This is a great option for those who want to add value to their home immediately, without having to pay for renovations out of pocket.
At John Antle, we pride ourselves on being knowledgeable yet relatable. We understand that the mortgage process can be overwhelming, so we take the time to explain every detail to you in a way that’s easy to understand. Our team of experts is here to answer any questions you may have, and we’ll work with you to find the best mortgage solution for your unique situation.
Our network of reputable mortgage lenders allows us to offer you competitive rates and flexible options. We’ll help you get pre-approved for a mortgage, so you can confidently shop for your dream home knowing exactly how much you can afford. We’ll also help you navigate the paperwork and provide you with regular updates throughout the mortgage process.