Purchase Plus Improvements
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Did you know that you can purchase a home and put the renovations right into your mortgage?
This is called Purchase Plus Improvements and most lenders offer this program. Why? Because these renovations are only allowed to take place if they ADD VALUE to the property. Once the renovations are completed, the property is actually worth more!
How To Obtain The Most Value From Your Mortgage
As COVID-19 shifts home renovations into high gear, it’s important to understand how to get the most value out of the process. The House Team in Belleville can walk you through the entire process, ensuring that you are getting the most value possible for the work that you’re putting in.
2020 has been the year for home renovations for many reasons, including:
- More time spent indoors
- Lack of recreational activities and public events
- Flexibility in finances due to the lack of social activities
Now that everyone is spending their time at home, they are realizing the need to redesign, replace or upgrade its functionality and appearance. For new homebuyers, this could mean redoing the flooring, updating the kitchen, putting new windows in, installing a new furnace etc. The options are endless!
If you are purchasing a home that needs some immediate improvements, it is important that you understand how to put those renovation costs under your mortgage! The House Team can help! We have put together a list of requirements in order to put your renovations under Purchase Plus Improvements.
Purchase Plus Improvements requirements:
- Renovations must add value to the property.
- Quotes for work to be done must be submitted with your offer to the lender.
- Renovations cannot add square footage to the property.
- Renovations cannot exceed 20% of the purchase price or $40,000.
- Minimum of 5% down payment required for this program.
- Work must be 100% complete before renovation funds are advanced.
Return On Investment For Home Renovations
Any potential return on investment from home renovations depends on a series of factors. According to the Appraisal Institute of Canada, renovations fall into three main categories.
1. Renovations with the highest return on investment
- Kitchen and bathroom renovations or updates result in an estimated return of 75 cents to a full dollar for every dollar spent. Much depends on the specific renovation, but adding a kitchen island, for example, returns roughly 65 cents on the dollar.
- Repainting the interior or exterior of a home in tones with wide-ranging market appeal can also pay off. A tasteful paint job, inside or out, yields 67 cents on the dollar.
- Energy-efficient projects return 61 cents on the dollar but have the added advantage of generating immediate savings on your energy bill. The best returns come from heating system upgrades such as furnaces, windows, and insulation.
- Returns vary but remain significant from updating décor: lighting and plumbing fixtures, counter tops, replacing worn flooring (vinyl or carpets) or refinishing hardwood floors.
- Decluttering by removing all excess items to showcase the features of your home can be inexpensive but yield a high return.
2. Renovations with the highest enjoyment value
The enjoyment value of a renovation is hard to measure in normal times. The threat of a prolonged pandemic makes it even more difficult when you factor in the sentimental value of the concept of home as a secure environment. Regardless, the Appraisal institute finds basement finishing, garages, sunrooms, additional decks, fences, and landscaping provide the most enjoyment.
3. Renovations that maintain the most worth
Technically, maintaining a home is maintaining its worth, but if the worth of the property is rising, maintenance can be seen as an investment. Replacing the roofing, updating the heating/cooling system, replacing windows and doors, updating electrical (panel, wiring, sockets, fixtures), and repairing structural defects top the list of maintenance projects.
Contact The House Team To Plan Your Purchase Plus Improvements
Are you planning on purchasing a home this fall and completing immediate renovations? Call The House Team in Belleville at 866 559 5016 or fill in the form below to schedule your FREE, no obligation appointment with us! We will review your mortgage situation with you in order to ensure that you are receiving the best possible value.
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