***article updated February 9, 2009***
Renovation Allowances - this is an great tool for the home buyer who does not have the extra cash to fix up their new home!!!
Here is how it works - depending on the lender, you can get up to $25,000 allowance for home improvements (not including appliances and furniture!) - this money is then forms part of your entire mortgage and must be completed within 90 days of you taking possession.
Let’s say for example you must have hardwood flooring in the townhome you want to buy and you simply do not have the extra money to purchase and install. When writing an offer to purchase, write in a condition to the purchase contract that the seller will allow the buyer to enter the property with a contractor to provide pricing on the flooring. Once you have that quotation, you submit that quotation along with the purchase contract for final approval on your financing - as you must still qualify for the entire mortgage amount including this allowance.
Upon closing of the purchase, your lender will forward the renovation allowance to the lawyer to hold in trust. Once the work has been complete, you provide your lawyer with a copy of the invoice and they release the funds to pay the bill! How simple is that!!!
Find a home without a garage and you need one? Well, use this allowance in the same manner!
Definitely a great incentive to help find the right home as it opens up many more potential properties when searching!
Incredibly, not many people utilize this allowance nor do many even know it is available to them! Take advantage!
Other great incentives for home buyers are the Home Renovation Credit, First Time Home Buyer Credit and the Increased Home Buyer's Plan (RRSP) withdrawal limit.
The renovation credit is up to a maximum $1350 - expenditures will qualify for the credit if they are incurred in relation to a renovation or alteration of an eligible home, provided the renovation is of an enduring nature and is integral to the property. Examples include new furnaces, windows and decks. Eligible expenditures include labour costs, professional fees, building materials, fixtures, equipment rentals and permits. This credit is only temporary and expires February 1, 2010.
The First Time Home Buyer Credit - is as straight forward as it sounds :) A buyer can receive a credit up to $750 - some rules do apply though - for example the buyer must not have lived in a self owned property for the last fiscal year before the purchase.
Home Buyer's Plan (RRSP) withdrawal limit has been increased from $20,000 to $25,000.
Though these credits seem small, every little bit helps the home buyer. These along with low interest rates and more affordable homes, we will see a stronger consumer confidence over the next year.