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Mortgage-Matters

Buying a fixer-upper

Are you thinking about buying a diamond in the rough to transform into your dream home?

No doubt it’s easy to be tempted by all the magical home makeovers seen on the home-improvement shows. With house values rising, this could be a great way to make home ownership a little more affordable by buying in a neighbourhood that is undergoing a transition.

Obviously, you need to avoid buying a money pit. Working with professionals will ensure that the improvements you are considering will be worth it to improve the value of the house. You don’t want to over-renovate the home for the area, so avoid renovations that just won’t be worth it in the end.

But how do you afford to do a renovation? When you purchase the home you will need sufficient funds for the down payment and closing costs. You take possession of the home, and if you don’t have the cash set aside, you will then need to secure a home-improvement loan or use a line of credit. It could be difficult to qualify for additional financing when you have just bought a home, and these options can also be expensive.

The great news is that there is an affordable solution – the Purchase Plus Improvements program, which will allow you to borrow up to 95 per cent of purchase price and improvements amount. You can borrow up to $40,000 on the purchase price of a home.

Here are the steps that you need to take:

Step One: Obtain a mortgage pre-approval from your mortgage broker, to determine your maximum approval amount.

Step Two: Find a home and have a general idea of what renovations need to be done as well as the cost. The purchase price plus the renovation cost cannot exceed your maximum approval amount for a mortgage. Lenders will request written quotes, detailing the work to be done, as well as the cost.

Step Three: Once your offer is accepted, you will need to provide the accepted purchase offer, as well as the quotes for the improvements, to your mortgage broker. A financing request will be sent to the lender which includes the cost of the renovations.

Step Four: Once you take possession of your home, you can begin the renovations. The lender will instruct the solicitor to hold the additional renovation funds, until the lender confirms the works has been completed. Once the renovations are completed, notify your mortgage broker, who will send out an appraiser to complete an inspection to verify the work is completed as per the quotes.

Step Five: The lender will receive the inspection report from the appraiser, and validate that the work has been completed in a good manner. They will instruct the lawyer that they are able to release the funds to you to pay the contractor.

If you would like to see if this program can help you affordably turn a fixer upper into the home of your dreams, give me a call at 250-826-3543. I’ll sit down with you and provide a no-charge analysis of your needs and financial situation.

 

 

 

 

 



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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com



The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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