“I’ve done two or three purchase plus improvement mortgages recently and you just have to follow the guidelines and get all your documents in order,” David Benson of Mortgage Intelligence
told MortgageBrokerNews.ca. “The problem with the program is that it’s a very precise program; people have to pay up front before working it into the mortgage.”
Problems may arise when clients are unable to foot the bill, themselves, but Benson says some contractors are willing to accept deferred payment if the work is relatively modest. The biggest issue is clients who want to do the work on their own.
“A lender is more reluctant to lend when the buyer wants to do the work himself,” Benson said. “It’s a program that can work but there’s a lot of work involved.”
Craig Spicer of Verico
Premier Mortgage Centre is another broker who sees the advantage of these types of products for clients, especially first-time buyers.
“Nowadays with the 80 per cent (loan to value) rule you’re hard pressed to get enough funds to do a renovation at refinance time, especially with the growth factor of housing prices,” Spicer said. “If you do it at purchase you can incorporate it into the mortgage.
“There are a few lenders who are willing to do it.”
Purchase plus improvement mortgages are becoming more popular among brokers and although they may require a good deal of work, industry professionals share their tips on getting the deal done.