Brampton and Ontario Mortgage Blog
Add renovation costs to your mortgage to make any property your dream home
October 28, 2015 | Posted by: Paul Hunjan
Paul Hunjan of Centum One Financial Group in Brampton knows that finding the perfect property is not easy. Even when you've got it narrowed down to your favourite choice, you often find there are renovations that need to be completed to fit your needs.
What should you do in this situation? Well, you basically have three choices. You can walk away from the deal and start your search again. You can apply for a line of credit in order to pay for the renovations, but you'll end up with two loans. Or, you can take advantage of the convenient Purchase Plus Improvement Program with Paul's help.
This program allows you to add the needed upgrade costs for the property to the purchase price, which is a great option because of the relatively low current mortgage rates (compared to credit).
For example, if you're purchasing a home for $300,000 and it needs $15,000 of immediate renovations (which is likely out of your budget due to cash flow), you'll end up with a home priced at $315,000 with the upgrades included.
Lenders can cover 95 per cent of the improved value; meaning, your mortgage would be $299,250 and your down payment would be $15,750. That's not much more than if you were buying the house as is, with a minimum down payment of $15,000!
Not to mention, with the latter scenario, you'd still have to find a source of $15,000 to do the renovations, which is not an easy task.
Under the plan rules, you can add up to 10 per cent in value to the original price of the home (up to $40,000). Therefore, in the earlier example you could have added up to $30,000 in upgrades. That could equal an entirely new kitchen, or an additional bathroom — it's up to you!
To find out more about how to take advantage of this plan, contact Paul at 416-820-8601, send him an email or visit his website. You can also like Paul's page on Facebook for more updates.