Introducing the Purchase Plus Improvements Mortgage, a program which allows qualified purchasers to borrow up to 20% of the post-renovation value of a home (up to a maximum of $40,000) with as little as 5% down.
Here are the 5 steps to see if you can qualify:
1.Obtain a mortgage pre-approval from your mortgage broker, to determine your maximum approval amount.
2. Find a house you would like to purchase and have a general idea of what renovations need to be done as well as the estimated cost of the renovations. The purchase price plus the renovation cost cannot exceed your maximum approval amount. Note: The lender will request written quotes to be provided, detailing the work to be done, as well as the cost.
3. Once your offer is accepted, provide the accepted offer, as well as the quotes for the work to be done, to your broker. He/She will have the lender approve the mortgage with the cost of the renovations included in the mortgage.
Here’s an example:
- Purchase Price: $350,000
- Cost of Renovations: $35,000
- Revised Purchase Price: $385,000
- 5% Down Payment Required: $19,250
- Mortgage Amount: $365,750
- CHMC Fees: $13,167
- Total Mortgage Amount with CHMC Fees: $378,917
4. Once you take possession of your home, you can begin renovations. The lender will instruct the solicitor to hold the addition renovation funds until the lender confirms the work has been completed. Once the renovations are completed, notify your broker and he/she will send out an appraiser to complete an inspection to verify the work is completed as per the quotes that were provided.
5. The lender will receive the inspection report from the appraiser and validate that the work has been completed in a good manner and as per the quotes provided. They will instruct the lawyer that they are able to release the funds to you to pay the contractor.
If you think this program might work for you or someone you know, call me for further details.
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