Purchase Plus Improvements Mortgage in Canada are becoming more popular. Many homes have great locations and good bones. But, more and more homeowners want to renovate to accommodate their needs and fashion style. If you found the perfect home that needs upgrades or repairs but extra money is scarce, then a purchase plus improvements mortgage is the best solution.
The purchase plus improvements program offered by the Canadian Mortgage Housing Corporation or CMHC allows homeowners the opportunity to renovate the home they purchase, where they otherwise may not have been able to afford it.
How a Purchase Plus Improvements Mortgage Works
Essentially, this type of mortgage provides the homeowner with additional money. You can use these funds above and beyond the purchase price to renovations. With this type of mortgage, you are able to make home improvements the moment you take possession of your home.
For this type of project, you should consult with an experienced mortgage broker. An experienced mortgage broker will help make sure that your project doesn’t fall short or get declined.
You should also make sure you are working with an experienced real estate agent. We also strongly recommend working with a reputable contractor to provide insights into potential pitfalls. They can better help you understand all of the risks and overall cost of renovations to complete your project.
Before a lender will consider a purchase plus improvement mortgage, they will want to review the work you are proposing to have done and get contractor quotes to ensure their money is being used appropriately.
Being thorough with this type of project ensures that your project gets approved, stays on budget, and meets timelines for completion.
Purchase+ Improvements Program Appraisal Process
Once you have your home picked out, your quotes to renovate it, and your financing in place, there is one final hurdle. All lenders offering purchase plus improvements mortgages require appraisals.
Your appraiser will look at two things. First, the appraiser will provide a valuation of the home as it stands. Secondly, the appraiser will want to incorporate the proposed work you are having done. This helps to assess what the value of the property will be once renovations are complete.
For this reason, your renovations will have to be meaningful and add value. The purchase plus improvement mortgage in Canada program is not designed to be used on trivial renovations. The funds must be used on reno’s that add value, like a kitchen or bathroom renovation.
Provided the appraised valuation meets the lenders guidelines, you can now move to remove your financing conditions if you haven’t done so already (again we recommend waiting until your financing is fully approved).
How to Apply for a Purchase Plus Improvements Mortgage
Many people opt to finance renovations on their own. This can be problematic if you don’t stay on budget or rely too heavily on high interest credit cards. Another, more viable and generally cheaper option is a purchase plus improvements mortgage.
The easiest way to get this type of mortgage financing is to work with an experienced mortgage broker. An experienced mortgage broker can help walk you through the process. They will help make sure that the home you plan on purchasing becomes your dream home, once fully renovated.
Once you have an offer in place and quotes to renovate, it’s time to circle back with your mortgage broker. If you are just beginning the process or you’d like a free consultation, the team at Mortgage Brokers Network is here to help.
Call us toll-free at 1-877-383-1577 or simply Apply Online and we will get working on your approval right away! See what 30+ years experience can do for you.