The perfect home (with some improvements!)

Has this ever happened to you?

You are house hunting. You have already determined your price range. Now you find a home you love, at the upper limit of your range, but it needs a new roof! You can swing the purchase financially, but you will have no cash left for the new roof.

Enter the Canada Mortgage & Housing Corp. (CMHC) Purchase Plus Improvement Program. This program, administered by CMHC but funded by mortgage lenders, will allow you to finance the purchase of your home plus the cost of future renovations, all in your original mortgage! These required renovations would be financed at the mortgage rate of interest, which is lower than the loan rate of interest. You would then spread the repayment of these renovations over 25 years, the same as your mortgage, resulting in an almost negligible change in your mortgage payment. There is no change in interest rate. There is no change in CMHC Insurance Premium rate and only a minimal increase in down payment.

Here’s how it works;

  • You put in your Offer to Purchase showing… say a 5{435763c83784f7362adf16aec6a4ffa3ed39c2c51e047e7cc3b29dbab8d1e357} down payment
  • During the financing condition period you obtain bona fide written estimates for the work required… new roof say $5000
  • This cost is then added to the Purchase Price
  • You would need to increase your 5{435763c83784f7362adf16aec6a4ffa3ed39c2c51e047e7cc3b29dbab8d1e357} down payment by $250
  • The mortgage would be for 95{435763c83784f7362adf16aec6a4ffa3ed39c2c51e047e7cc3b29dbab8d1e357} of the original Purchase Price PLUS the cost of the new roof.

Even though this program is available through CMHC, not all banks and mortgage companies participate. A Mortgage Broker will have the information you require and can arrange for a pre approval under this program. This will leave only the house to be qualified during the financing condition period.

For more information contact a mortgage professional who can give you guidance, and help you decide what’s right for your situation.

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