Before you make an offer, have your quote ready

A little girl dangles her feet over the side of a dock into the water. To be able to play in the water for the day, she must show that she’s able to swim first. She complains that the water is cold and won’t jump in to do her swim test. The adult bribes her with a Jolly Rancher saying that if she does the swim test that she can have one. The little girl doesn’t budge. The adult pulls out the Jolly Rancher and shows the little girl that she really can have one.

Once the Jolly Rancher was pulled out and shown to the little girl, she was in the water swimming to the dock. Why? Had the adult not shown she had a Jolly Rancher, it would have made the swim test fiasco take much longer. In the home buying world, it’s very beneficial to have the “Jolly Ranchers” in hand when applying for a mortgage and making an offer.

What is a Purchase Plus Improvement mortgage?

Home owners that have stumbled upon their dream fixer-upper may benefit from a Purchase Plus Improvements mortgage. A Purchase Plus Improvements mortgage gives home owners in Canada an affordable option for buying and fixing up the home of their dreams. Home owners can buy their dream home and fund their home renovations all in one simple and convenient mortgage.

What’s the maximum amount?

To qualify for the program, the purchase price of your home and the cost of renovations cannot exceed the maximum amount that you’ve been approved for. The majority of lenders will offer a maximum of 10 per cent of the value of the property once improvements are made, with up to $40,000 towards renovations. If a renovation budget is over $40,000 borrowers will most likely need to apply for a construction mortgage. A construction mortgage is more difficult to get approved for and typically has a higher interest rate.

Given timeframe

Moreover, borrowers must finish the improvements within a certain time frame. This is a pre-arranged schedule that the lender has set for the funds to advance. However, improvements must be completed for the funds to be released. Most lenders offer a maximum of 120 days for improvements to be complete with some exceptions for a maximum of a year. If the work is not completed by the end of the timeframe given, the lender will reduce the mortgage amount and you won’t get your hold back.

Have your quote ready!

There is one other common holdup with a Purchase Plus Improvement mortgage. You can get held up during the process when waiting for a quote. Before you make an offer, you should be ready with a quote outlining the cost of improvements in hand. The main setback for borrowers when applying for Purchase Plus improvement is waiting for the quote.

When the adult showed the little girl the reward, the girl instantly jumped in the water. She knew what she was getting once she completed the swim test. A lender, in this case, is the little girl; when they are given the quoted amount that the improvements will need, the process was quicker and smoother. However, when the lender must wait on the quote from the contractor, the process will be painstakingly slow. This can also slow down to process for making an offer on the property and for getting improvements completed.

We can help!

Get in touch and we will help you prepare! Making the home buying and improvement processes run as quick and smooth as possible! Give us a call or stop on in to our office. You can get in touch with us here!