Grande Prairie Mortgage Broker
Grande Prairie Mortgage Broker

Purchase Plus Improvements

If you have your eye on a fixer-upper, or are thinking about building your dream home, financing your endeavours may be easier than you think. Grande Prairie has alot of great real estate for sale with basements that need finishing or just simply upgrading the style of your new home in Grande Prairie. Call our Grande Prairie Mortgage Brokers to start the process and discuss your Mortgage Options. We can offer these amazing products with low mortgage rates. Call to discuss 780-357-3993 Jodi Whalen your Local Grande Prairie Trusted Broker!!

 

“Renovation Mortgages” allow homeowners to renovate a newly-purchased or refinanced home, or build a new one, and roll the cost of the improvements into the balance of the mortgage. This allows homebuyer to benefit from the low interest rate associated with a mortgage, and the simplicity of one mortgage payment, while putting down less than 20% of the home’s ‘as improved’ value. There are a few lenders who do purchase plus improvements and each of them have different policies in place to get approved and complete the funding of these programs. Call Jodi today to chat about the lenders and products/policies with each lender.

 

To acquire this type of mortgage, the first thing you must do is make the offer conditional on a renovation mortgage program such as CMHC’s ‘Purchase Plus Improvements’ program. The next step is to acquire a quote from a contractor breaking down the price of the items to improve to determine the cost of the renovations. CMHC will approve a loan of up to 95% of the ‘as improved’ value of the home — or the value of the newly constructed home — provided the money you’re putting into the home does, in fact, improve the value.

It is meant to fix the home up regarding cosmetic not to fix bad items on the home such as a cracked foundation, mold or an outdated roof with no life expectancy left. These items should be fixed by the seller as they are a liability to the bank to fund prior as there is no way to guarantee they are getting fixed. If you do not follow through with the improvements there is no way for the bank to force you to complete them.

 

While newly constructed homes may receive up to four monetary advances before the home is completed, with refinanced or newly-purchased homes, CMHC only advances up to 95% of the original value. You must be prepared, then, to finance the renovations and improvements up front, keep all your receipts, and await reimbursement after the renovations are complete and the lender has time to evaluate the as-improved value. Depending on the lender determines if we need reciepts or just a home inspection to show the renovations are complete. Call your Trusted Grande Prairie Mortgage Broker today to discuss your options.

 

If you’re thinking about performing renovations on a new home but you’ve put down more than a 20% down payment, consider taking advantage of a Home Equity Line of Credit (HELOC) — a low-interest line of credit that is secured against your home.

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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