Have you ever walked through a home thats almost perfect. If you could only renovate one of the washrooms or them all. Update the Kitchen or make the Laundry Room more functional. These renovations often happen while living in the home but few people realize we can finance these during the purchase. This is one of my favourite discussions to have with realtors as they often show the almost perfect home to a potential buyer and our Purchase Plus Improvement Program may just be the perfect solution to help make the almost perfect home, perfect!
Key Features:
-Qualified homebuyers who want to make improvements to their newly purchase property immediately after possession.
-Down Payment requirements are based on the "as-improved" value of the property.
-Value "as-improved" value is used to determine the maximum loan amount subject to loan-to-value limitation.
-Typical maximum loan amount is $60,000 but there are exceptions to allow larger advance for renovation.
Example: $600,000 purchase price, "As-Improved" Value $700,000. Lender will advance 80% of $600,000 on closing which $480,000 and the client put 20% down payment. However, the lender will authorize up to 80% of the future value of $700,000 which is a final mortgage of $560,000. $560,000 - $480,000 is $80,000 which could be available for the renovation. The client would cover any deposits (if necessary) and ideally would receive receipts for the work accomplished and provide them to the lender to make payment for the Purchase Plus Improvement Loan once its completed. The lender will register this new mortgage amount at time of closing and honour the terms negotiated on the mortgage for the full amount - mortgage advanced on closing plus renovation.
What I really like about this product is often clients use line of credits to finance renovations which are interest only instead of principal and interest and also have a higher interest rate associated so if a client decides to instead, implement the purchase plus improvement program, they can build the renovation into the value of the home and not uses unsecured credit facilities.
This product becomes a terrific solution to any home your considering buying that just requires a little more work and you want to renovate right at the time of closing so you can move into your perfect home