Purchase Plus Improvements
With the changes to rules around mortgage refinancing, did you know you can only borrow up to 80% of the value of the home you own!
This is important information for First Time Buyers to be aware of because if you plan to buy your home now with 5% down payment and do some renovations in the next few years, you may find that you can not refinance your home to cover these costs. This may mean that you end up borrowing the money from a line of credit at a much higher payment ($20,000 could amount to a payment of $400 to $500 per month on top of your mortgage payment!), or you put off doing the improvements you are dreaming of for close to 10 years (yes, that is how long it may take you to build up enough equity in your home)!!
So, how do you get the improvements you want without all the hassle? Consider a Purchase Plus Improvements mortgage. When you are buying a home, you are allowed to add the cost of improvements to the mortgage. For instance, if the purchase price is $200,000 and you want to put in new flooring and upgrade the kitchen for a cost of $30,000, we would prepare your mortgage at a cost of $230,000. You would need 5% of that for your down payment ($11,500) and you will mortgage the rest. Your monthly payment will only increase by about $146/m and you will have a move in ready house with the renovations you wanted. No separate line of credit with a $500+ monthly payment and no waiting 10 years to be able to refinance to get the money for the renovations!
If you would like more information about this please email your Centum Mortgage Partners.
Posted by Kim Reddin
on November 7, 2013