Did you know that you can finance your home and cover costs to fix it up at the same time through a home renovation loan known as a Purchase Plus Improvements (PPI) mortgage?
Often times, it’s just not possible to find the perfect home to meet all your needs, although you can envision how it could be transformed into your dream home. If the improvements on the home you’re looking to buy require a considerable financial investment, a PPI mortgage may be an ideal solution as it allows you to make enhancements at the time of purchase by rolling the costs into your monthly mortgage payments.
This is one of the most affordable and easiest ways to finance your renos, and makes even more sense in today’s low interest rate environment. And 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 will require.
How does a Purchase Plus Improvements work?
Once you’ve found the ideal property, you’ll have to obtain quotes from contractors based on the work you’d like completed. Your mortgage agent will then send these to your lender so that the estimated renovation costs can be taken into account when evaluating your total loan. The amount of your mortgage plus the renovation costs must not exceed your maximum approval amount.
The renovations can begin after you receive an approval for mortgage financing from your lender and you take possession of your new home.
It’s important to understand that the renovation funds for which you’ve been approved have to be used solely for that purpose. In other words, you can’t use the money to buy new furniture or appliances. To ensure your reno funds are used appropriately, your lender will forward the funds to your lawyer, who will release them to you only when the agreed-upon renovations have been completed. Your lender will typically use the services of an appraiser to conduct an inspection and confirm renovations completed are in line with the original quotes.
Have questions about whether a home renovation loan is right for you? Answers are a call or email away.