A Purchase Plus Improvements Mortgage in Canada allows homeowners to borrow additional funds to make improvements to their newly purchased property. This type of mortgage is ideal for buyers who have found their dream home but need to make some renovations or upgrades in order to truly make it their own.
Benefits of a Purchase Plus Improvements Mortgage
One of the biggest benefits of a Purchase Plus Improvements Mortgage is that it allows homeowners to make the necessary improvements to their new home right away, rather than having to save up for them or pay for them out of pocket. This can be especially helpful if the improvements are necessary in order to make the home livable or if they will add significant value to the property.
Another advantage of a Purchase Plus Improvements Mortgage is that the funds for the improvements are typically disbursed in stages. This means that the funds are only released as the work is completed, which helps to ensure that the improvements are done properly and that the money is being spent wisely.
Qualifying for a Purchase Plus Improvements Mortgage
In order to qualify for a Purchase Plus Improvements Mortgage, you must first be approved for a regular mortgage. The lender will then assess the planned improvements and determine how much additional funding will be required. The mortgage will be based on the improved value.
It's important to note that in order to get a Purchase Plus Improvements Mortgage, you will need to get quotes for the work and materials. This is important because the appraiser will need to see these quotes in order to determine the value of the property after the improvements have been made. The mortgage amount can then be based on this improved value.
Receiving the Funds for Improvements
Once the loan is approved, you can begin making the necessary improvements to your new home. However, it's important to keep in mind that the additional funds from the Purchase Plus Improvements Mortgage will not be released until after the work is completed. This means that deposits with the contractor or payment for materials will need to be done with money out of pocket.
As various stages of the progress are completed, you will send pictures of the completed work as well as copies of paid invoices for materials or from your contractor. We’ll forward these to the lender and the lender will instruct your lawyer to release that money to you. A progress inspection by an appraiser may be necessary.
Minimum Down Payment on Purchase Plus Improvements Mortgage
Your purchase plus improvements mortgage could be approved with as little as 5% down payment.
Alternative to Purchase Plus Improvements Mortgage
One alternative to a Purchase Plus Improvements Mortgage is to finance the improvements yourself and then refinance the property after the improvements are completed. This option allows you to pay for the improvements upfront using your own money, rather than borrowing additional funds from the lender.
If using this strategy we would make sure the initial mortgage we arrange for you would be easy to break out of with minimal or no penalty.
Overall, a Purchase Plus Improvements Mortgage can be a great option for homeowners who want to make improvements to their newly purchased property but want to finance those improvements using low-interest mortgage money. It's a flexible and convenient way to finance the necessary upgrades and can help to turn a house into a dream home.
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