In today’s Finance Minute let’s talk about Purchase Plus Improvements. I had a client who wanted to buy an older property because older properties are bigger or roomier than the newer ones. However, the kitchen and the floor were old and outdated. I told them no problem you can add the cost of the renovation to your mortgage. They were quite shocked. There’s a Program called Purchase Plus Improvements where lenders allow you to add the cost of the improvements on your mortgage which effectively means the home goes up in value by the same amount of the improvement. I told them to get a quote from Home Depot specifying the scope of the work and the cost. We got a quote for $20,000. I submitted it to the lender and we got it approved. They didn’t have to use Home Depot for the renovations. They did more research and compared and found a better renovator to do the project. Here’s the mechanics of the program. They moved in first and then they did the renovations. The bank gave them the $20,000 AFTER they did the work. Why after? Because some contractors will not do the renovations within 90 days if the money Is given upfront. Where did they get the money in the meantime? I was able to help them find a short term lender-after all I have a guarantee from the bank that the money is going to be released once the work Is finished. My clients are so happy now they bought the home they liked and after the renovation it felt like living in a brand new home. The majority of Canadians don’t know about this hidden gem.
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