Purchase Plus Improvements Mortgage – Renovations Done Now
Use a purchase plus improvements mortgage to cover the cost of that renovation.
So you’ve found the perfect house but it doesn’t have that garage that was on your list of top 5 requirements, a Purchase Plus Improvements Mortgage might be the perfect fix.
There are many different mortgage programs out there and one such program will allow qualified buyers to borrow up to 10% of the purchase price of a home which can then be put towards the cost of a renovation, all while bundled up into your mortgage loan amount. This is the Purchase Plus Improvements Mortgage.
Let’s Look At An Example
To give you an example of how it works, let’s say the purchase price of a home is $400,000. You could borrow up to 10% of that (i.e. $40,000) for your renovation.
This is an ideal option if you have saved carefully for your down payment but can’t afford a major renovation as soon as you take possession. With the purchase plus improvements mortgage you wouldn’t have to wait to get started on the renovation and make your new home complete!
The improvement amount is calculated into the overall mortgage loan amount which you start paying interest on come the possession date.
Here’s An Idea Of How The Purchase Plus Improvements Mortgage Process Works
- You find the near-perfect property and determine what improvements are required.
- When writing the offer to purchase, let your realtor know that you may require a little longer condition period, thereby allowing time for contractors to view the property and provide you with quotes.
- We then submit your mortgage application, along with the best quote you’ve selected, to the lender for review and approval. As the mortgage loan requires mortgage default insurer approval, it is important you understand that the improvements must match the quote provided. For example, if you submit a quote for a garage addition, you could not go ahead and have kitchen renovations completed instead.
Don’t Forget The Paperwork
- All lender conditions would have to be met by providing necessary mortgage paperwork (job letter, pay stub, down payment verification etc.).
- On closing day, your real estate lawyer will release the funds required to purchase the home but will hold back the renovation funds until instructed by the lender.
- In order for the lawyer to release the remaining funds, invoices must be supplied and in many cases, an inspection confirming the work is 100% completed is required.
If your contractor requires payment before completion of the work then you may have to arrange alternate financing due to the conditions above.
At the end of the day, the Purchase Plus Improvements Mortgage is an excellent option for those who have found the near-perfect home but would like to apply some renovation improvements at the time of purchase.
Give us a call to see if we can secure a purchase plus improvements mortgage for you.