This program is designed for people who wish to purchase a
home that may require some immediate upgrades
or repairs. For example, a new roof, central air, a
new furnace, new siding, eaves, fascia, doors, windows, a
new kitchen, carpeting… or any other renovation that would
increase the value of the home.
If a buyer wants to use
the purchase with improvement program they must obtain a
quote from a contractor or contractors
for the repair work and or the improvements to be done to
the home. Note: The solicitor will
“hold-back” on closing the “improvement” portion of the
mortgage until the work has been completed. Once the work
has been completed, the solicitor
will advance the balance of the funds and the contractor can
be paid back.
Purchase With Improvement Mortgage Example:
| Purchase Price: |
$400,000.00
x 95% = |
$380,000.00 |
| Cost of Improvements: |
$15,000.00
x 95% = |
$14,250.00 |
| Total Mortgage: |
$415,000.00
x 95% = |
$394,500.00 |
In this example, the client is putting down 5%. The
mortgage application is made for the amount of $394,500.00,
which represents 95% of the purchase price and improvement
cost. After the improvements are complete the lender
advances the holdback of $14,250.
The client must pay 5% of the improvement
costs to maintain the ratio of 95%. The same applies if
clients is putting 10%, 15% down etc.
