It can be tough to get your foot in the door of a new house, but many lenders have come up with a variety of ways to help home buyers.
“Generally the lender will allow 10 per cent of the purchase price up to $40,000 (for home improvements). So, for a purchase price of $250,000, they will lend an additional $25,000 for improvements. Purchase price of $600,000, they will lend an additional $40,000 for improvements,” said Invis - Beyer Mortgage Services mortgage broker Paul Macara.
Macara grew up in Oak Bay and knows what it takes to get into the market here.
“There are a lot of fixer-uppers in Oak Bay, and having the funds to throw up a suite or do a kitchen reno – even though they don’t allow suites, but that’s what people are doing – makes a difference,” he said.
Extra funds for upgrading landscaping are also available. “I had one recently where they asked for $20,000 for landscaping and (the lender) estimated it would only add about $16,000 to the value, so that’s what they got.”
“There are so many house deals in Oak Bay where the people have been living in the home forever, so the house needs a little work,” said DFH realtor Cassie Kangas.
“A lot of people looking for homes really don’t know where the money is going to come from to fix them up. If you move to Langford you can buy a brand new house, but if you want to live in Oak Bay, you might have to do a little renovation,” said Kangas.
“Across the board, (most lenders) offer similar products,” Macara said.
In these cases, the buyer or contractor will have to pay for the improvements up front, then get their money back after the work has been done.
The process:
1. Obtain cost estimates for the upgrades.
2. Get your appraisal (done by lender) for the value of the property “as is” and the estimated value of the property once the improvements are completed.
3. Renovation costs are included in your mortgage.
4. Complete your upgrades.
5. Renovation funds are released by your solicitor upon completion/inspection.