Purchase Plus Improvement CMHC
Program for Toronto Homes and Income Properties
Canada Mortgage and Housing Corporation (CMHC) insured mortgage loans are available to cover the purchase price of a home as well as an amount to pay for immediate major renovations or other improvements that the purchaser may wish to make to the property.
This option eliminates the need to obtain secondary financing after the purchase to
pay for improvements. The homebuyer obtains a single first mortgage, makes a single mortgage payment, and benefits from first mortgage interest rates.
The insured loan will be based on the lower of:
The purchase price plus the actual cost of improvements, or,
The “as improved” market value. Prior to approval, CMHC will determine the market value of the property after renovations/ improvements. The lending value will not exceed the market value of the property after renovations/ improvements.
Applicants must have the following:
A minimum of 5% down payment of total cost (purchase price plus renovations/ improvements).
Cost estimates for renovations/improvements.
Qualifications to obtain a CMHC insured loan through an approved lender.
Maximum Mortgage (95%)
Mimimum 5% down payment
An excellant example of this program is to purchase a triplex. Three separate units that are built and exist as three separate units. Let us presume that the triplex was built circa 1950' to 1960's and has not been updated.
Estimates need to be obtained in writing for the proposed improvements.
Sample improvements could be all three kitchens, all three bathrooms, window upgrades or the addition of something as simple as a common laundry. All of these individually add to the value of the security for the lender and its resale value.
More importantly, the addition of new windows for thermal efficiency, new furnace and air conditioning, improved kitchens and bathrooms would be a great incentive to attract tenants in a competitive tenant market..
The conclusion to the entire exercise is; better rents from a better investment, and YOU with a property worth holding for the long term appreciation of cash flow and qualified tenants.
Contact one of our Financial Team to discuss the program with you in detail.