Grande Prairie Mortgage Broker
Grande Prairie Mortgage Broker

Your Options for Financing A Home Improvements Mortgages

Whether you want to build your dream home or want to turn a fixer-upper into your dream home, many are afraid they can’t get a loan for their project. However, it is probably possible via a purchase plus improvements loan.

Grande Prairie mortgage lenders offer purchase plus improvements loans because they know how many properties can only be purchased with these mortgage products. These loans are perfect if you want to buy a home and finish the basement for more living space or rent it out as a mortgage helper. These mortgages allow you to buy a property with a starter home and add an extra bedroom or two. Or you can buy the older property and pay for the updates thanks to the Purchase Plus Improvements loan. One benefit of these loans is that you’ll only have to put down 5% of the home’s “as improved” value, while another is that you’ll only have to go through the lending process once instead of buying the property and then applying for a HELOC or a credit card. Call to learn about your Mortgage options with team Whalen Mortgages Grande Prairie, your trusted Grande Prairie mortgage brokers.

For example, a Purchase Plus Improvements loan the only option available to Grande Prairie mortgage customers. “Renovation Mortgages” allow people to renovate their newly purchased home, a product perfect for those who took out a conventional mortgage to buy an existing home and now realize how much updating it requires. “Renovation Mortgages” are also an option if you’re refinancing your mortgage and want to take out a loan to update or make repairs to the property. What are the benefits of renovation mortgages? One is the simplicity of having a single mortgage payment. Another is that you’ll minimize the fees associated with the loans, since there’s only one loan to apply for. What’s the downside? There are relatively few lenders who offer purchase plus improvement loans or renovation mortgages. Their terms and conditions vary widely regarding eligibility, associated fees and interest rates. Talk to Jodi Whalen to discuss the various options available to you so you can find the best mortgage lender and loan for your particular situation.

How can you acquire this type of mortgage? The first step is making the offer on the property conditional on being approved for a renovation mortgage program and to get a contractor quote for the renovations you want completed.  One of the most common ones is the CMHC’s ‘Purchase Plus Improvements’ program. You have to receive at least one quote from a contractor listing the improvements to be made to the home, the price to do the work, and how each one will add to the value of the property. The CMHC could approve a loan for up to 95% of the “as improved” value of the property or the value of the newly built home once it is completed. They’ll only approve the work if it actually adds value to the home, so don’t go overboard on luxuries you want to add to the property. These loans are intended to fix cosmetic issues. The CHMC loans may not cover repairs, though they are needed. This means a CHMC loan may not cover the cost of replacing an old roof, removing mold or fixing that cracked foundation. They may say these issues have to be repaired by the seller as a condition of sale. Know that if you already have more than 20% equity in the home, a home equity line of credit or HELOC may be the better choice.

What if you’re building a new home? Home builders can receive up to four monetary advances to pay for work. CHMC only advances up to 95% of the value of the property. This means you must be able to put at least 5% down or borrow the down payment through a flex down mortgage option which team Whalen Mortgages Grande Prairie have lenders to help you get exactly what you are looking for. You’re also required to manage the cost of the project so that you don’t find yourself short of cash waiting for the next advance or over-spend on the project. The lender won’t just give you the money. You’ll have to keep all your receipts and wait for reimbursement as the renovations are completed. Only after the lender verifies the renovations are complete and the property’s value has increased will they issue the final payments. Whether the lender accepts the receipts or requires a home inspection at each stage of work depends on the mortgage lender. Talk to a Grande Prairie Mortgage Broker today to learn about your options.

Call to discuss 780-357-3993 Jodi Whalen your Local Grande Prairie Trusted Mortgage Broker!!

 

Example:

 

Usual way of financing:  
Purchase Price $300,000.00
Less 5% down payment $15,000.00
Financing Rquired $285,000.00
Plus 4% insurance premium $11,400.00
Total Mortgage $296,400.00
Mortgage payment @ 3.5% $1,483.85/month

 

 

Purchase plus Improvements:  
Purchase Price $300,000.00
Proposed Improvements $20,000.00
AS IMPROVED VALUE OF HOME $320,000.00,/
Less 5%of as improved value $16,000.00
Financing required $304,000.00
Plus 4% Insurance premium $12,160.00
Total Mortgage $316,160.00
 
Mortgage payment @ 3.5% $1,582.77/month

 

 

In this example the you are able to personalize the home to suit your needs and improve the value of your home, without waiting until you could afford to do the changes.
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