17 Jul

Renovating May be Easier than You Think!

General

Posted by: Rita Wagner

Since home refinancing has been limited to a maximum 80% of the value of your home, an increasing number of buyers are looking at Purchase Plus Improvements products to meet their home financing needs.

This may be an option worth examining if you would like to buy a new home that needs updating. Whether you’re purchasing a home that needs just a small renovation or a major redo, a Purchase Plus Improvements mortgage can help you transform an ordinary house into your dream home.

How purchase plus improvements works:

Purchase Plus Improvements programs enable you to obtain funding for the cost of the home purchase as well as the cost of the renovations – up to a maximum value of 95% of the total purchase price.

Conditions of the program include:

  • As a borrower, you must provide a list of improvements with quotes at the time of application. As a result, more time may be required for subject removal. 
  • The initial advance of funds at time of closing will be up to 95% of the approved value of the property minus the cost of improvements
  • The balance of the funds will be held in trust by the solicitor until completion of the approved improvements (time limits may be imposed), which is confirmed via: 
  • An invoice from the contractor who completed the improvements
  • An inspection report or
  • Confirmation from a certified appraiser or

 

  • Usual sub-search and construction lien act requirements are to be adhered to at the time of release of holdback
  • Some restrictions may apply depending on the lender

 

As always, if you have any questions about the information above or your mortgage in general, I’m here to help!

10 Jul

Transitioning from Renter to Homeowner

General

Posted by: Rita Wagner

Transitioning from renter to homeowner is one of the biggest decisions you’ll make throughout your lifetime. That’s why it’s essential to surround yourself with a team of experts – including both a mortgage and real estate professional – to walk you through the steps to home ownership, answer all of your questions and concerns, help you decide what kind of home you can afford and get you pre-approved for a mortgage.

With interest rates still hovering around “emergency” levels – low rates never before seen by your parents and even your grandparents – now is an ideal time for first-time homebuyers to embark upon homeownership.

Down payment

The main reason many renters feel they can’t afford to purchase a home has to do with saving for a down payment. But there are many solutions available today that can help first-time buyers with their down payments.

Many lenders will allow for a gifted down payment and a few with a borrowed down payment.

Last year, a $5,000 increase was made to the RRSP Home Buyers’ Plan, meaning first-time homebuyers can now withdraw up to $25,000 from their RRSPs for a down payment – tax- and interest-free.

And if you’re part of a couple making a home purchase together, you can each withdraw up to $25,000 from your RRSPs.

Educating and coaching

There’s an endless amount of information available to prospective homeowners – through the Internet, friends, family members and anyone willing to voice their opinion on a given subject. What you really need, therefore, is education and coaching as opposed to being bombarded with more information.

Speaking to a mortgage professional in order to obtain a pre-approval prior to setting out home shopping can help set your mind at ease, because many first-time buyers are overwhelmed by the financing and buying processes, and often don’t know what it truly costs to purchase a home.

Real examples can go a long way in showing you what it costs to buy a home in your area versus what you’re currently paying in rent. For instance, if a renter is currently paying $1000 per month, with that same payment (including taxes) they could afford to buy a $190,000 home. And assuming real estate values increase 2% per year over the next five years, the new homeowner would have accumulated approximately $24,000 in equity in their home. If they continue renting, however, this $24,000 has generated equity in someone else’s home.