Purchase Your Home and get an Additional $60,000 for Renovations
Below is a quick write-up I did on the Purchase Plus mortgage program, who it is designed for and how it operates
If you're interested in purchasing a property and then renovating it to increase its live-ability and value, then the Purchase Plus Mortgage program may be your ideal mortgage solution.
When applying for a mortgage, lenders typically lend based on the homes current appraised value. However, the Purchase Plus program allows lenders to lend on the future value of the home, after the necessary improvements are performed.
This mortgage program allows a maximum of $40,000 in additional funds to be put towards improvements on high-ratio mortgages. On conventional mortgages some programs will grant a maximum of $60,000 for improvements.
How it works?
To take advantage of this program, borrowers will first need to qualify for the whole mortgage amount including the additional improvement portion. Once they’re qualified, the process of purchasing a home is relatively the same except for one additional step. Lenders require a satisfactory quote outlining the scope of the work and the cost estimates.
With a satisfactory quote, the home appraiser will generate a report with 2 values. The current value of the property, and the future value.
When it is time to purchase the property, the lender will advance the funds for the current property’s value to pay out the seller. The lender then retains the funds for the future value of the property until construction is completed.
During the renovation phase it is the home owners responsibility to pay for the completed work. Once the project is 100% complete, the appraiser will review the project and inform the lender of the new property value. With a satisfactory report the lender will then transfer the remaining funds to the borrower.
Speak with a Contractor
Are you unsure of what your potential project will cost, or where to find a reputable contractor? I highly recommend Greg Baarts of GreNor Homes. His years of experience and excellent reputation will ensure your project completes on time.
Greg Baarts
GreNor Homes | www.grenorhomes.com
604-505-4574 | Greg@grenorhomes.com
Find out if this Program is right for You
If you are interested in more information on the Purchase Plus option, or would like to discuss possible mortgage scenarios please send me an email, or call me at 778-215-4121.