Purchase Plus Improvements or Refinance Plus Improvements are niche products. They are products available, that allow you as the mortgage consumer to complete some updating or renovations to a new or already existing home. Maybe you have the urge to do a few upgrades and add your own personal touch to your new or existing home but you just don’t have the funds available to complete them. Through our Plus Improvements programs, we are able to fund those renovations through your existing home mortgage. Often I get a call from a client well after their mortgage closes asking if we can redo things to get them some more money. After the fact, we typically are a bit more restricted, but prior to your actual purchase, we do have that ability to add the cost of the renovation to your mortgage BEFORE you move in.
Let’s say for example you have come across the perfect home and it is for sale for $300,000 but it is just not quite perfect. However, with a good kitchen reno, it would be THE home for you, but you just don’t have access to the $30,000 that the kitchen reno will cost. Lots of people would simply walk away and continue home shopping. Please don’t!! What we can do for you is add that reno cost on to the new mortgage. Here is a quick example of what that might look like:
Without Renos:
$300,000 purchase
$15,000 down payment
$11,400 CMHC insurance premium
$296,400 mortgage
$1463 monthly payment *based on 5 year fixed rate currently at 3.39% currently
Unhappy homeowner skimping and saving to find some money to now complete the upgrades
With Renos:
$30,0000 purchase
$30,000 in additional money for improvements
$12,540 CMHC insurance premium
$326,040 mortgage
$1609 monthly payment *based on 5 year fixed rate currently at 3.39% currently
Happy homeowner moving into the home that is perfect for his or her needs.
You see, for an increase in your monthly payment by $146 we are able to add on an additional $30,000 in upgrades to your home. If you have been saving for your down payment then I’m sure the thought of saving almost double that amount for some home renos seems daunting. Further, you could use an unsecured form of financing from your bank, however, those rates typically start around 6%. So that payment is already going to cost you more monthly than simply adding the cost to your mortgage.
If you have found that home but it just needs some TLC, or even if your current home needs some updating, please call us! We would love to assess your unique situation and offer our advice.
