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Since home refinancing has been limited to a maximum 80% of the value of your home, an increasing number of buyers are looking at Purchase Plus Improvements products to meet their home financing needs.
This may be an option worth examining if you would like to buy a new home that needs updating. Whether you’re purchasing a home that needs just a small renovation or a major redo, a Purchase Plus Improvements mortgage can help you transform an ordinary house into your dream home.
How Purchase Plus Improvements works
Purchase Plus Improvements programs enable you to obtain funding for the cost of the home purchase as well as the cost of the renovations – up to a maximum value of 95% of the total purchase price.
Conditions of the program include:
•As a borrower, you must provide a list of improvements with quotes at the time of application. As a result, more time may be required for Subject Removal
•The initial advance of funds at time of closing will be up to 95% of the approved value of the property minus the cost of improvements
•The balance of the funds will be held in trust by the solicitor until completion of the approved improvements (time limits may be imposed), which is confirmed via:
◦An inspection report or
◦Confirmation from a certified appraiser or
◦An invoice from the contractor who completed the improvements
•Usual sub-search and Construction Lien Act requirements are to be adhered to at the time of release of holdback
Some restrictions may apply depending on the lender
If you have any questions in regards to this, or would be interested in knowing more, just contact us!
D & K
Impact of Depreciation Reports for Strata Properties in British Columbia
On December 13, 2011 through an order in council, the government of British Columbia created a new regulation related to depreciation reports, affecting all strata corps in B.C. with at least 5 units or more. There are more than 500,000 strata property owners in BC in about 29,000 strata corps. This new rule required all stratas formed on or before then to either complete a Depreciation Report by Dec. 13, 2013, or to opt out with a 75 per cent or more vote of owners, at either a special general meeting or AGM. Newer strata corporations will have until six months after their newly formed strata’s second AGM. Depending on how this plays out (who performs the report and how they are interperted), this could a great move for consumer protection, but hopefully not a tool to be mis-used by third parties, ie: lenders, mortgage insurance, or even mis-informed Realtors.
What exactly is a depreciation report you may ask? Simply stated, a depreciation report is a study which determines the long term funding needs of a strata corporation, related to the common components of the property which are a) the responsibility of the strata corporation to maintain or repair, and b) which require repairs and maintenance work less often than annually. The legislation further defines the requirements for the preparation of depreciation reports in Part 6.2 of the Strata Property Regulation. These reports not only show problems the building will have, but also present options and budgets for how strata councils may deal with these problems.
Costing several thousand dollars, these extensive reports are pricey, especially for smaller stratas on a per unit basis. Consequently, some strata councils approved and moved forward immediately, most voted to have them completed but left them until the last moment. There are a few that have voted to not complete (defer) the reports, which is already proving problematic because both prospective buyers and their lenders are aware they are required, and want to see them.
The reports themselves are very extensive, detailing system replacements and budgeting for decades in a manner not typically undertaken by most stratas in the past. The resulting reports quantify current deferred maintenance and forecast replacement and repair needs assistance in helping create realistic financially responsible budgets. The resulting reports we've seen range from a clean bill of health verifying the strata has been well looked after, to financially disastrous for a few buildings. In some cases exposing significant deferred maintenance costs therefore resulting in massive catch up costs immediately due in addition to bumping up the monthly fees. In some cases requiring a doubling of monthly fees.
In conjunction with this, there is also new legislation that allows to apply to the provincial court with a simple majority if a strata is unsuccessful with getting a 75% vote to compel a strata to engage in certain critical repairs necessary to ensure safety and prevent significant loss or damage as if the strata owners had passed a resolution approving a special levy.
The results for the strata property purchaser are that they now can purchase with more peace of mind and lower risk than previously and should not be misled by a seemingly lower cost entry to a condo with lower monthly fees, only to get a surprise after purchase. Some primary lenders are now refusing new mortgage financing on stratas without completed depreciation reports (another story). This could result in some bargain purchases for cash buyers who are open to higher risk. Ultimately stratas will be driven by the market to comply and complete them eventually.
At 8am this morning CMHC announced that they are increasing insurance premiums for the first time since the late '90s.
The increases are as follows:
- Up to and including 95% will go from 2.75% to 3.15%
- Up to and including 90% will go from 2% to 2.4%
- Up to and including 85% will go from 1.75% to 1.8%
- Up to and including 80% will go from 1% to 1.25%
- Up to and including 75% will go from .65% to .75%
- Up to and including 65% will go from .5% to .6%
These increases go into effect May 1, 2014. This is a good opportunity to add value to any friends, family or prospects sitting on the fence.