So you have found your perfect home, however it is in need of some renovations to accommodate you and your family; perhaps it’s a new kitchen, bathroom or windows. You are wondering how you will be able to afford to complete the renovations.
What should you do?
One option to consider would be the Purchase Plus Improvements Program (PPIP) offered by Genworth one of Canada’s Mortgage Insurers. The program allows for home improvements to be financed with your new mortgage with as little as 5% down payment (Mortgage Insurance Premiums will apply to the total mortgage amount).
This program allows the homebuyer to complete the necessary renovations and have the associated costs rolled into the mortgage; taking advantage of the lower interest rate mortgages offer when compared to unsecured lines of credit or credit cards.
The program covers the sale price of the home plus any renovations that would increase the value of the property, such as a new bathroom , kitchen, roof, windows. Renovations cannot be soley cosmetic in nature.
If you intend to use this program it is wise to make your Offer to Purchase include a clause conditional on getting the approval to complete the renovation you desire.
Next you would obtain quotes from a contractor to determine costs. Once approved, you can begin the renovation. Once the renovation is complete an inspector with confirm all improvements have been completed and send his report to the lender who will then release the funds to you.