So after months of looking you’ve finally found that dream property. It’s in the perfect neighbourhood, school district with an easy commute to work ( we can all dare to dream).
However, one thing, the kitchen is a mess. Oh and the floors are faded and cracked. Wait, you only have 3 working electrical outlets -so nowhere for the cappuccino machine - plus the kitchen counter looks like the previous owner chopped wood on it.
So what do you do?
Well, you can walk away and hope that you can find another property. Anyone house hunting in today’s market will tell you it might not get much better plus in the event that you do find a home that checks all of the boxes, it will, most likely, put you way over budget.
Another option would be to renovate the kitchen, but you’ve already spent your last dollars on closing costs.
You could take the money off of your line of credit but, after buying a house, who wants to add more debt?
One thing you may want to consider is a program offered by CMHC/GE called “purchase plus improvements”. The program provides home buyers/owners with the opportunity to make improvements to their home and allows the homeowner to borrow against the improved value of the property.
Guidelines may vary between various insurers and lenders but here are a few highlights
- Eligible for properties up to 4 units but 1 must be owner occupied
- An improvement is bathroom, kitchen, flooring etc. Therefore, the renovation must add equivalent value to the property. So appliances or the hot tub you’ve had your eye on are not eligible.
- All work must be completed and receipts provided for release of funds
- Purchase plus improvement can be done with as little as 5% down of “renovated property value”.
Example:
Cost of Home $400,00
5% down payment: $20,000
Cost of renovations $40,000
New Value (approved by lender) $440,00
Down payment for renovated value 5%: $22,000
So instead of saying “no” to that home with the 1960’s kitchen, say “yes” to how your new home suits your lifestyle.
