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COASTAL LIVING: Plan rolls reno costs into mortgage
Nanaimo homebuyers will now have access to a nation-wide plan that will enable them to have their dream home.
The Canadian Home Renovation Plan will allow homebuyers to make renovations of about 10 per cent of the purchase price of a pre-qualified home, provided it is a single-family dwelling and meets minimum criteria of all the lenders. The cost is then added to the mortgage.
“The way it works is if the home was purchased at $300,000, you can add 10 per cent,” said Joe Tomkins, a mortgage broker with DLC Canadian Mortgage Experts. “Now 10 per cent is the general rule, you can go higher but most lenders allow 10 per cent or $40,000. There are certain lenders that allow more and the insurers will allow more as well but the baseline rule is add 10 per cent and you’re good to go.”
Tomkins said the plan is buyer focused. He heard from realtors that clients were walking away from prospective homes because they couldn’t afford renovations after making a down payment on what would otherwise be a house they liked. If the buyer could change a few things to the home, they would’ve made an offer, he said.
“At 10 per cent, what you do is, you go in, you get your quotes done [for renovation work] and I get them approved with a lender,” Tomkins said. “They say ‘yes,’ so your new working value is (with a $300,000 house) $330,000 instead of $300,000.”
The lender will finance the closing of the mortgage, the buyer then makes the improvements to the home, the broker confirms work has been completed and a lawyer releases the money to the buyer.
“You can do some of the improvements yourself, you can use contractors to do the other improvements but the whole point is this program is meant to make clients stop when entering a listing and make us change the conversation with our buyers,” Tomkins said.
DLC Canadian Mortgage Experts and Universal Mortgage Architects were chosen as Nanaimo-area lending partners with the Canadian Home Renovation Plan.
Any house that signs up with a Canadian Home Renovation Plan broker gets a designated text number, online listing, signs and open house support, with homes only listed with participating mortgage brokers.