Is Purchase Plus Improvement Mortgage For You? - Private Mortgages Canada

Is Purchase Plus Improvement Mortgage For You?

Summery

Having chosen a perfect home to live in is everyone’s dream. However, more often than not, homes for sale in the market are usually out-dated, there could be things needed to be repaired, or as simple as the interior is not what you are looking for.

Luckily, the most affordable option to finance a renovation exists and that’s through the help of Purchase Plus Improvements Mortgage. While there could be limitations, these customized mortgages allow you to make home improvements as soon as you move into your new home.

There are 5 easy steps for Purchase Plus Improvement Mortgage that home buyers follow which you might not know yet. Let’s remedy that, shall we?

#1 Working With Trusted Mortgage Broker

To determine their maximum approval amount, homebuyers usually secure pre-approval from their trusted mortgage broker first. Brokers may include some improvement costs into the mortgage amount to give them an idea of how it could cost them.

Basically, home buyers should have a general idea of what renovations are needed as well as the costs. The maximum amount can vary but the base amount for first-time home buyers is $40,000.

#2 Renovation Appraisal

The homebuyer should provide the contractor’s estimate upfront with the offer to purchase the property when applying for purchase plus improvements mortgage. The estimate should outline all the work to be done to the house and the costs.

#3 Mortgage Approval

The Mortgage Broker will then submit the application to the lender to have it approved together with the quotes for the work to be done to the house. Commonly, the costs of the renovations are already included in the mortgage once approved.

If your lender agrees to the home buyer’s plan of renovating the property, they’ll send the approval back to the Mortgage Broker with the revised amount which is the purchase price plus the renovation costs. The interest rate of the renovation does not necessarily affect the mortgage rates.

#4 Home Renovation Financing

Once they take possession of their home, home buyers can begin the renovations. However, they will receive the funds when the renovation is complete which means they will need to come up with the funds to complete the improvements.

Funds could come from credit card, gifted money, store credit, line of credit, or a credit on their contractor themselves. These could be paid off once the work is complete and the funds are released.

If you also worry about mortgage bad credit history, there are lenders for poor credit that have mortgage programs that could still help you.

#5 Appraisal Confirmation

The lender sends out a representative which is an appraiser to ensure that the renovation was complete in a good manner and as per the estimates provided once the work has been done. The lawyer will then release the funds to the homebuyer.

Although the timeline may vary depending on the required work, the renovation typically takes 60-90 days before the homebuyer can actually move into their new home.

Final Thoughts

Buying a home could be one of the biggest events a person can experience. It could be overwhelming and worrisome at some point especially if it needs improvements. It doesn’t have to be because to purchase a home that includes the renovation is now relatively easier with the help of these improvements program.

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