How to buy and renovate your new home

July 10, 2017 | By | Add a Comment

new home and renoMany Toronto home buyers are looking at older properties and find themselves in a common predicament: they’ve found a property that suits them, but it needs some costly and immediate upgrades. Good news. We’ve got a mortgage that will keep you financially afloat!

“Purchase Plus Improvements” Mortgage

The cost of the immediate renovations you are planning are added into your mortgage. This way, you don’t have to rack up credit card bills or sell investments to pay for the upgrades. This mortgage will cover the sale price of the home, plus any renovations that would increase the value of the property, up to $40,000. This way you can spread your payments over the life of the mortgage and have a cost-effective way to get into your dream home. You can then use your pre-payment privileges to pay the renovation off faster.

The mortgage plus renovation process:

  1. Obtain cost estimates for the upgrades.
  2. An appraisal with two separate values will be required. First, the value of the property “as is”, and the estimated value of the property once the improvements are completed.
  3. Your lender will add the estimated costs of the renovation into your mortgage. The committed amount of the mortgage will be advanced to your solicitor, who will be instructed to hold back the renovation funds until the work has been completed and inspected.
  4. Complete your upgrades; funds are released upon completion.
  5. There are options we can discuss for carrying your expenditures until the funds can be released.

So if you find a home with “great bones” that can be renovated into the home of your dreams, get in touch early. I’m here to make sure your home buying journey has a happy ending.

For more on this type of mortgage, including getting an estimate and appraisal, check out my post on How to buy a Fixer-Upper.

To get started with planning your renovation, check out my post on Making your Dream Reno a Reality.

 

Filed in: Home Renovations, Purchase | Tags:

About the Author (Author Profile)

I'm a Toronto Mortgage Broker. My focus is on saving people time and money in financing and re-financing their homes. Am passionate about helping people make informed choices, giving back, and helping to improve financial literacy in Canada.

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