Turn an OK house into your perfect home.

You have been shopping for homes in Sherwood Park and the greater Edmonton, AB area for the past few months and you finally find one in the perfect neighborhood. The price is right and it’s the perfect size and layout for your family. The only problem is the kitchen is simply too old and needs a serious renovation in order to work for your family. Too bad, but now you are back to house hunting. If only there were another solution… Good news! Home buyer meet purchase plus improvements mortgage.

Purchase Plus Improvements Mortgages

Family Mortgage Planners is able to offer you a purchase-plus improvements mortgage which allows you to add a renovation worth up to 10% of your base purchase price. This can be as much as $40,000 in renovation costs and can be added into your mortgage amount. This can help turn your future house into the perfect home. As a guideline, the renovation allowed for this program must actually improve the value of the home. The types of renovations that our clients commonly include in their purchase plus mortgage include:

• Kitchen Renovation
• Bathroom Renovation
• Replace Carpets, Flooring and Tile
• New Roof or Roof Repair
• Build a Basement Rental Suite
• Basement Finishing
• New Windows and Doors
• Exterior Siding
• New Garage or Garage Suite
• Interior Home Paint
• Exterior Home Paint
• Deck and Fencing

Renovations that usually won’t be allowable in a purchase-plus-improvements mortgage include:

• Swimming Pools
• Hot Tubs
• Sauna
• Home Appliances
• Portable Air Conditioners
• Unique Landscaping or Water Features
• Generally anything that does not add reasonable market value to the home

The Purchase Plus Improvements Approval Process Explained

Securing a purchase plus mortgage approval is similar to getting a standard mortgage with a few extra steps:

Step 1. Put an offer on a home you wish to purchase. Always include a subject to financing condition AND subject to home inspection condition to protect yourself while you complete your due diligence on the home purchase. We recommend requesting 10 to 14 days to finalize the financing and home inspection. Keep in mind you’ll also need time to get quotes for the purchase plus improvements mortgage. Your realtor can advise you on this as well.

Step 2. Send Family Mortgage Planners a simple project plan listing the renovations and rough estimated costs you wish to include in your purchase plus improvements mortgage. Also send a copy of the accepted purchase agreement and MLS property feature sheet.

Step 3. Immediately contact a renovation contractor or two and get them to provide you with quotes your project plan. Estimators usually require access to the house so arrange that with your realtor ahead of time if possible. If you have the skills and time to do the work yourself, you will still have to provide quotes for the materials needed to complete the project. Provide the Family Mortgage team the written quotes at your earliest opportunity. We usually will need them at least 48 hours prior to the financing condition removal date agreed to in your purchase contract.

Step 4. Sign your approval paperwork and confirm with us that the lender has received your supporting paperwork and signed off all your approval conditions.

Step 5. Congratulations, you can remove your financing conditions. Once you get the keys to your new home you can get working on those renovations!

FAQ

When do I receive the renovation money with a purchase plus improvement mortgage?

The renovation portion of your new mortgage will be paid to you once the project is 100% complete. This means that you will have to arrange terms with your renovation contractor to pay them at completion OR you will have to pay for part of the renovations up front yourself. A renovation company will usually require a deposit up front from you to start the work. Upon request we can supply them with a letter confirming that the held back renovation funds are available to be released to them completion of the work. If you would like a referral to a contractor or tradesperson please let us know and we will be happy to make an introduction.

What happens if I change my mind and never complete the improvements?

If your renovation plan is never completed your lender will simply apply the portion of the mortgage that was set aside for your project to your existing mortgage principal. Keep in mind that your monthly payment will not go down as it was set based on the assumption you would actually complete the home improvements.

How long do I have to complete the renovation project?

Typically you have up to 90 days to complete your renovation project but it is not uncommon to secure another 30 day extension when necessary. To be safe we recommend making your best effort to complete the project on time.

What happens if I need more than the $40,000 maximum?

Sometimes $40,000 isn’t enough to complete the renovation you need. If this is your situation we can request a larger amount but your lender will require more details in order to approve it. At the very least an appraisal will be required to confirm that the project will actually add value to the property equal to the cost of the project.

Contact us if you have any additional questions or would like to discuss the particulars of what you have in mind for you future home.