Purchase Plus Improvements: A Powerful Resource for Homebuyers
You’ve searched long and hard for the perfect dream home, but after finding it, you realize the property needs some work. Purchasing a new home is a major financial investment, and adding renovation costs to the scenario on top of that, before even moving in, can be a bit much.
Enter a very beneficial program from Canada’s major insurers: purchase plus improvement plans. Simply, these programs provide financial assistance to a homebuyer by pairing together value-increasing home improvements with their overall mortgage, removing major upfront renovation costs.
Who offer the best purchase plus improvements?
Mortgage professionals work with insurers to offer the purchase plus improvements option. We work with Canada’s top three mortgage insurance companies (listed below) to tap into reliable, beneficial resources to help craft valuable and optimal mortgage products.
The three major insurers are:
- Canada Mortgage and Housing Corporation (CMHC)
- Genworth Canada
- Canada Guaranty
While there are many more insurers out there, the above three provide the most reliable resources to help tap into the full potential of one’s mortgage. Their program requirements are similar, provide similar benefits, and are reliable sources for insurance.
Are there any requirements?
Like everything in this world, there are certain conditions that must be met to be eligible for purchase plus improvements. Generally, the following conditions must be met:
- Loan Purpose: Purchase transactions up to 95% or refinances up to 80% LTV. Available for extended amortizations up to 30 years.
- Eligible Properties: Maximum four units with at least one unit occupied as the principal residence. Also, can be used for new constructions or existing properties.
How does it all work?
Imagine you found your dream home. A nice little two storey attached home in a beautiful, quiet family neighbourhood. The home costs a reasonable $400,000 but you realize that you may need to add some money to renovate the place. You have decided to provide a 10% down payment on your home as part of the purchase process.
Taking into account the above information, we are going to calculate two scenarios: With renovations and without. Thus, please keep in mind that any rates or information used for the calculations below are as of October 27th, 2014.
Have specific numbers you want to use? Use our online mortgage calculator! Click HERE
How mortgages.ca Can Help
mortgages.ca can help you or your client gain take advantage of the Purchase Plus Improvements through five easy steps:
STEP 1: Find a house/condo that you are interested in purchasing, making note of any renovations and their potential costs. mortgages.ca will then provide you an approval on the house “as-is” without taking into account any renovation work.
STEP 2: Get firm price quotes on all your renovation needs. Quotes must state the work that will be completed, with as many details as possible. mortgages.ca will then provide a revised approval including the new, researched costs.
STEP 3: Take possession of your new home and begin renovations, keeping track of the quality of work. Therefore, all renovations must be paid by you initially, financed through credit cards and lines of credit.
STEP 4: Once the work has been completed, mortgages.ca will send a bank representative to assess the quality of the work, to ensure the work has been completed, and all guidelines have been met.
STEP 5: Once the work done has been given the thumbs up, your lawyer will be instructed by the lender to release the funds for the renovations. You can pay yourself back using these funds.