Many of us have turned away from a property because it wasn’t quite what we expected. Maybe the kitchen was too outdated. Or there were only two bathrooms found throughout the house instead of three. How about that dreaded carpet when all you wanted was some engineered hardwood?
Instead, we jump from property to property, hoping to cross everything off our checklist, when in reality, we could have had everything we wanted from the first property we looked at.
Renovation mortgages allow homeowners to renovate a newly purchased home, and in turn, roll the cost of the improvements, into the balance of the mortgage. As a result of this process, homebuyers benefit from the low-interest rate associated with the mortgage, all rolled into one payment. Homeowners are able to put less than 20% down, in order to be able to acquire this type of mortgage.
In order to seize advantage of this type of mortgage, the offer on any property of interest should be subject to a renovation mortgage program.
The Canadian Mortgage and Housing Corporation (“CMHC”) has a Purchase Plus Improvements mortgage available. The potential homeowner is required to acquire three quotes from contractors, in order to determine the true cost of the renovations. In instances of new home purchases, CMHC will approve up to 95% of the original value of the home. The upfront cost of anticipated renovations is the sole responsibility of the homeowner. However, with a record of receipts, these out of pocket expenses are reimbursed upon the re-evaulation with the improved value of the household to consider.
With slight changes to monthly or biweekly mortgage payments, the risk is minimal. Don’t let the perfect property slip by because something looks off. Seize the opportunity.
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