You Can Finance Your Home & Cover Reno Costs TogetherYou Can Finance Your Home & Cover Reno Costs Together
Buying a move-in ready home isn’t for everyone. In fact, many people fall in love with a house because of, not in spite of, its need for rehabilitating or remodeling.
If your dream home is a diamond in the rough that requires a considerable financial investment, a Purchase Plus Improvements (PPI) mortgage may be an ideal solution to meet your needs.
This type of mortgage allows you to incorporate the costs of your home renovations into your overall mortgage. It’s one of the most affordable and easiest ways to finance your renos and makes a lot of sense in today’s low interest rate environment.
Whether you want to make home improvements for your immediate enjoyment, or if you’re looking at improved resale value down the road, a PPI allows you to make enhancements at the time of purchase by rolling the costs into your monthly mortgage payments.
As with any mortgage, you’ll want to get pre-approved by your mortgage agent to determine the amount for which you qualify. This will enable you to search for a home in your price range, taking into account the renovations it may require.
How it works
Once you’ve found your desired home, you’ll need to obtain quotes from contractors based on the work you want to complete. These, in turn, will be sent to your lender, via your mortgage agent, who will take the estimated renovation costs into account when evaluating your total loan (the amount of your mortgage plus the renovation costs can’t exceed your maximum approval amount).
Once your lender provides approval for your mortgage financing, and you take possession of your new home, the renovations can begin. It’s important to note, however, that the renovation funds you’ve been approved for must be used solely for that purpose. In other words, you can’t use the money to buy new furniture or appliances.
To ensure this happens, your lender will take the necessary steps to forward the funds to your lawyer, who will release them to you only when the agreed-upon renovations are deemed to be complete. Your lender will typically use the services of an appraiser to conduct an inspection and confirm everything is in order based on the original quotes.
As always, it’s best to touch base with your mortgage agent to determine whether this mortgage option is right for you. Answers are just a call or email away!