Categories: General
Date: January 13, 2010
Title: Purchase with Improvement Mortgage
A mortgage that adds more value to your home!
A mortgage that adds more value to your home!
What are the Benefits of Purchase with Improvements?
- Clients save time by getting financing for renovation plans at the point of purchase for their new home
- Clients secure low cost financing for renovation projects
- Improve the value of the home beyond its existing market price
Who is Purchase with improvement mortgage suitable for?
- Clients who want to purchase and renovate a home before moving in or clients who want to increase the value of their home through improvements
- Clients with significant renovation projects that are expected to take between 3 and 6 months to complete
How does Purchase with improvement mortgage work?
- Upon application clients will need to provide a detailed list and cost estimates of the work they wish to carry out
- The funds required are agreed upon up front
- Smaller advances under 10% will be released by client’s solicitor (lawyer) upon completion and approval by an inspector
- Larger advances will be held by the Bank until the work has been completed and approved by the inspector. Advances that are larger than $50,000 will be released in pre-agreed stages
Hints and Tips...
- The funds required are agreed in advance so any subsequent cost increases are the client’s responsibility
- Clients will need the funds up front to pay for the work as the funds will not be released until the work has been completed and approved
Client Case Study
Clients: Jerry and Kim, married with two teenage children.
Situation: Jerry and Kim have been looking for a larger home as the kids are growing up. Their realtor found them a slightly older home that needed renovating as it was starting to show its age. Jerry and Kim decided they wanted to renovate the kitchen and bathroom to open up space, modernize the home and increase the value.
Sheldon, Jerry and Kim’s mortgage broker, suggested they apply for the Purchase with Improvement Mortgage Program so they could borrow money against the increased value of their home provided by the renovations. Sheldon helped them gather the required documentation and demonstrated how to plan a renovation project using the planning tools provided by CMHC.
The plans were accepted and after the three months the project was completed and approved by an inspector, the Bank disbursed the funds to Jerry and Kim’s solicitor and through the improvements the value of their property has increased.