You’ve been on the hunt for the perfect home for months, you just can’t seem to find the one. Now what?
You’re probably starting to feel a little hopeless that the right property for you is out there. But, maybe there’s a way to create a home you love with renovations. Let’s chat about a Purchase Plus Improvements mortgage! This type of mortgage allows you to add the cost to renovate to your new mortgage at the same time your new home is purchased.
How does a purchase plus improvements work?
Basically, you’d collect quotes for renovations from a registered contractor and send me copies. Then, I would submit your mortgage with the price of the quotes added to the purchase price of the home. This allows us to finance the bulk of the renovations into your new mortgage. Once the lender has approved your mortgage, they will do an “as complete” appraisal. The “as complete” appraisal values your home once the renovations (as per the quotes we provide) have been completed. Provided that this appraisal comes in equal to or greater than the total cost of the new mortgage, we’re good to go!
Our financing and improvements are approved; what else do we need to know?
All lenders will require the renovations to be complete and inspected before releasing the mortgage money for the renovations. The money for the renovations will be held in trust by the lawyer until the work is inspected to ensure this money is used to renovate and not run off to Tahiti for a holiday!
The tricky part with this type of financing is that the lender won’t release any money for the renovations until the appraiser inspects this work and confirms that it does match the work detailed in the quotes. This means in between your move-in date and the time that the renovations are 100% complete, you’re financing this work. Making a plan for this interim time is something that I can help you to plan for too.
At the end of the day, you’ll end up living in a home you love that suits your family. The best part being your renovation and home is financed at one time. This means a much lower cost than financing this outside of your mortgage in another way!