The short answer is YES, you can, but understand how this works. Will you be given a cheque at closing to pay for the renovations? Not quite. Here is how a "Purchase plus improvement mortgage program" works:
- Along with the usual documents required for the mortgage, the Buyer also provides a contractor's estimate
- The lender considers the mortgage based on the value of the home after the renovation is done
- Upon closing the lawyer forwards funds for the purchase price of home. But then...
- The Buyer contracts for the renovation, possibly paying out of her own pocket up front for materials and labour, if required by the contractor
- Once the renovation work is complete, the lender will now send an inspector to confirm that the work has been done according the submitted estimate
- The work is approved, and the lawyer now has permission to release the remaining funds earmarked for the renovation work.
It's still a great program if you know how to handle it.
This week mortgage rates kept moving down a bit and to my surprise one can now get a variable rate below Prime.
For our best clients we get 3.63% for 5-year closed term and Prime minus 0.10% (2.15%) for a variable rate. Just wondering how long these low rates will last.
With my best wishes for the Thanksgiving holiday...
Vasko DeLev, AMP
Accredited Mortgage Professional
Verico Capital Mortgages Inc.
106 - 18 Deakin St, Ottawa ON K2E 8B7