Have you ever spent day-after-day touring resale homes in Barrie with a real estate agent but not finding the “exact” match for your family? There always seemed to be something just not right, maybe it was the kitchen, the bathrooms, missing a fence or the lack of landscaping. Did you know that the Canada Mortgage and Housing Corporation (CMHC) offers a program to lenders that allows home purchasers to finance some home improvement projects at the time they purchase the home?
The lender will allow the purchaser to add up to 20% the value of the home in improvements, they just need to be permanent improvements (no furniture or appliances). To qualify the purchaser must collect contractor quotes for the work they are looking to get done. These amounts would be added to the approved mortgage amount but held in trust by the purchaser’s lawyer.
Once the improvements are complete (usually the work must be completed 90 – 120 days after the close) the lender requires a certified appraiser to conduct an inspection to confirm the completion. At this point the lender will allow the lawyer to release the held-back funds to the home owner.
The only drawback to using this program is that 100% of the funds are held-back until all improvements are completed. This means that the purchaser must have the financial means to cover any deposits or material costs up to the completion of the work.
Keep in mind that the purchaser must qualify using the after “improvements” property value, so if the purchase price is close to the buyer’s maximum pre-approval amount they likely won’t be able to add improvements to their approval.
To find out more details about the “Purchase Plus Improvements” program contact your local mortgage broker. They should be able to determine if you qualify for the program, what costs are involved & the steps in the approval process.
Darren Robinson is a Barrie mortgage expert, dedicated to offering the best mortgage strategies and provides personal assistance to help people qualify for difficult mortgages and loans. Call 705.737.6161