Thursday, January 14, 2010
CMHC Purchase Plus Improvement Program
So you found the perfect home, and in this market that's not always easy! But as a result of the conditional home inspection (because of course your real estate agent told you that you would be best to make your offer conditional upon a home inspection), you realize this house needs a new roof, and if you finished the 6 foot high basement, you would have that rec room and the extra bedroom you really need! But that's a lot of money that you don't have readily available.
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 the improvements you need, all in your original mortgage! These required renovations would be financed at the mortgage rate 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 and its easy!
1. Let's say you put in your Offer to Purchase with a 10% down payment.
2. During the Financing condition period you obtain written estimates for the work required.
3. The cost of the improvement is added to your Purchase Price, which means that your down payment must be slightly increased to cover the cost of the improvements.
4. The mortgage would be for 90% of the original Purchase Price PLUS the cost of the improvements.
Even though this program is available through CMHC, not all banks and mortgage lenders participate. A Mortgage Broker will have the information you require.
I recommend you call a Mortgage Planner like Joe Sammut at Mortgage Architects for more information. His coordinates are as follows: