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Category: Home Renovation Financing and Mortgages

  • Toronto’s HELP Program

    Toronto’s HELP Program

    Toronto’s Home Energy Loan Program

    As a top General Contractor in Toronto, BVM Contracting has worked with clients that have accessed renovation financing from a variety of sources. One great way to access renovation financing AND do right by the environment for your next home renovation is with The City of Toronto’s Home Energy Loan Program (HELP). This program allows eligible homeowners to access up to $75 000 as a low-interest loan from the City of Toronto to help pay for eligible home energy improvements.

    Eligible HOME ENERGY IMPROVEMENTS

    The following is a list of eligible improvements that can be covered by a loan from the Home Energy Loan Program:

    • High-efficiency furnaces/boilers/air conditioners

    • Air-source heat pumps*

    • Window / door replacements*

    • Basement/attic/exterior wall insulation

    • Air sealing (e.g. weather stripping or caulking)

    • Geothermal systems*

    • High-efficiency water heaters

    • Tankless water heaters

    • Drain-water heat recovery systems

    • Toilet replacements

    • Solar hot water systems*

    • Electric vehicle charging stations (Level 2)

    • Rooftop solar PV panels*

    • Battery storage

    *Qualifies for 20 year amortization

    Find out here about which home improvements gives you the best return on your investment and do not break the bank!

    The HELP program offers low interest loans, up to 20 year amortizations on eligible upgrades, and the loan can be paid off at any time! Of course there are eligibility requirements for the program so before you look too far into this program please look through the eligibility requirements below, as well as some information about the application process.

    HOMEOWNER Eligibility

    You may qualify for a low-interest loan through HELP if:

    • you own a detached, semi-detached, or row house;

    • all of the property owners on title consent to participate in the program;

    • your property tax and utility payments to the City are in good standing; and

    • you obtain written consent from your mortgage lender, if applicable*.

    *If your property has a mortgage, you will have to fill out a customized Lender Consent Form. Contact BVM Contracting to get access to the Lender Consent Form and start the process of getting approved by your lender for the program! The ratio of the remaining mortgage compared to the value of the home will dictate your ability to have access to this program.

    It is important to understand that you are still able to access other rebates and incentives at the same time as enrolling into the Home Energy Loan Program. Take a look through some of the other rebates and incentives that you have access to in our blog, or contact us to learn more.

    The Application Process

    Step 1: Complete an Application Form

    To access the application form, click here. 

    You can print and mail the application to the following address:

    Home Energy Loan Program
    Environment & Energy Division
    City of Toronto
    55 John Street, 2nd Floor
    Toronto, ON
    M5V 3C6

    You can also complete it online and email it to homeenergyloan@toronto.ca.

    Once the City of Toronto receives and approves your application, they will send you a funding offer that states the maximum amount that your property is eligible to receive through the Home Energy Loan Program (HELP). 

    If your home is subject to a mortgage, you will need to send your mortgage lender a letter of consent form to fill out. Your mortgage lender’s consent is required before the City can send you a funding offer. BVM Contracting can help you obtain this form and get consent from your lender, if needed.

    Step 2a: Home Energy Assessment and Funding Request

    Book a home energy assessment with an Energy Advisor registered by Natural Resources Canada.

    The assessment will include a basement-to-attic assessment of your home’s insulation, heating and cooling systems, and detect any air leaks or drafts.

    When the assessment is complete, you will receive:

    • A Renovation Upgrade Report with recommendations for specific improvements

    • An EnerGuide rating based on your home’s current energy performance

    • Information on available incentives and rebates

    For recommendations of Registered Energy Advisors and information on incentives and rebates available for home energy assessments, click here and scroll to the bottom of the blog, or contact BVM Contracting. We work with a network of Registered Energy Advisors that will be able to HELP!

    Step 2b: Submit your funding request

    Determine which improvements you wish to make and get a quote from the general contractor of your choice, based on your goals, budget and recommendations of the Energy Advisor. 

    Your funding request will include:

    • a list of the improvements you intend to undertake;

    • details and cost estimates based on the quote from your general contractor; and

    • the estimated incentive and rebate amounts available to you from the utility companies.

    BVM Contracting has completed many of these types of quotes and will be able to accurately price out the cost of each upgrade you decide to move forward with. We have also helped homeowners fill out the Funding Request Form to ensure that they are not missing out on any other incentives or rebates.

    Click here to access the Funding Request Form. 

    Step 3: Property Owner Agreement

    Once the City has approved your Funding Request, they will send you a Property Owner Agreement (POA), which is the funding agreement between the property owner(s) and the City.

    You must sign the POA and return to the City. Once the POA is approved by the City, they can provide, if requested, up to 30 per cent of the funds to help you get your project underway.

    If you are doing more renovations than the eligible items above (which is usually the case) and you are finding other ways to finance your build, visit BVM Contracting’s Financial Section of the website

    Step 4: Complete your improvements and submit your project completion report

    Homeowners assume full responsibility for the work performed, which includes selecting, hiring and paying the general contractor, and obtaining all required municipal and/or provincial permits, if applicable. BVM Contracting can help guide you through the permit process, if necessary.

    When your project is complete, book your post-retrofit home energy assessment with your Energy Advisor. The Advisor will verify the improvements and provide a new EnerGuide rating for your home.

    Submit a Project Completion Report (click here to access), signed by your Energy Advisor, along with your general contractor’s invoices and your new EnerGuide rating label. The City will then provide you with the remaining funds for your project.

    Step 5: Repay the loan over time via your property tax bill

    Once your project is complete, the City will notify you when your loan payments will begin. The loan payments begin 2 months after the post-project completion date. You will be enrolled in the City’s Pre-authorized Tax Payment plan and repay the City via eleven monthly installments per year over the term of your loan.  Loan payments made via the property tax bill are treated in the same manner, and subject to the same penalties, remedies and lien priorities, as property taxes.

    At any time during the term of the loan, you may pay the outstanding balance, without penalty, to clear the loan from your property. Sometimes, depending on the renovations completed, homeowners can reappraise their home’s value and unlock some equity to put towards paying down the loan.

    Interest Rates and Terms for The Home Energy Loan Program

    The following interest rates are set for 2020 for the program:

    Current interest rates for the Home Energy Loan Program
    Current interest rates for the Home Energy Loan Program

    It is important to note that:

    • An administrative charge of two per cent (2 per cent), which reflects the City’s cost of administering the program will be added.

    • The value of the loan, which will include the funding amount, interest, and an administrative charge, cannot exceed 10 per cent of the current value assessment (CVA) for your property, or $75,000, whichever is less.

    • Homeowners will repay the loan via their property tax bill and can pay off the loan at any time without penalty.

    Approximate Monthly Payment Based on Size of Loan

     

    Reasons to Choose HELP for your Renovation Project

    1. Enjoy low-interest rates and repayments terms of up to 20 years.

    2. Avoid the large upfront costs of home energy improvements and pay for them over time as you save on your energy bills.

    3. Repay the loan via installments on your property tax bill. You can pay off the loan at any time without penalty.

    4. Receive ongoing support from the HELP team and assistance accessing additional rebates incentives from Province of Ontario and utility companies.

    5. The loan will be attached to your property, not to you, the property owner. This means that if you sell your home before the loan is repaid, the new owner will assume the balance of the loan.

    In our opinion, if you are eligible for this program you should consider filling out an application. Need some help? Contact us and we can HELP you get the process started!

    BVM Contracting is committed to giving homeowners the best insight into different financing options for renovating their home. Further than providing renovation advice and industry trends, we also pride ourselves on being able to provide value to home owners before, during, and after renovations. 

    About BVM Contracting

    BVM Contracting is a full-service General Contractor or Home Builder located in Toronto. We provide home renovation and building services for major home renovations (kitchen renovations, bathroom renovations, basement renovations, full interior renovations, home additions, and new home construction). Our goal is to help guide our clients through the process of renovating their home, from concept to completion.

    Further than providing General Contracting and Project Management for major home renovations, we also offer value-added services such as renovation financing, renovation rebate consultations and services, building permit and design services, smart home installation services, and real estate investor services.

    To learn more about our offering by visiting our services page.

  • Mortgage Default Insurance

    Mortgage Default Insurance

    Mortgage Default Insurance

    In Canada, the government has put in place an insurance that makes home-ownership more accessible. Learn more about this insurance below!

    What is Mortgage Default Insurance?

    Mortgage default insurance is a very common and necessary portion of the overall cost of mortgages in Canada. For many people in the Greater Toronto Area, a 20 percent down payment is not feasible due to the high cost of homes, so this insurance is used to allow people better access to the housing market by making a smaller down payment on a home. The insurance allows lenders to keep mortgage interest rates lower than they would be without the default insurance, and protects them should homeowners default or stop making mortgage payments.

    What is the cost of Mortgage Default Insurance?

    The cost of this mortgage default insurance ranges from 2.80 to 4.00 percent of the mortgage amount (Home Price minus down payment), is added to the overall mortgage amount, and differs depending on the size of the down payment received (see below).

    What are the requirements of Mortgage Default Insurance?

    There are some requirements you have to meet in order to qualify for mortgage default insurance:

    • The maximum amortization for insured mortgages is 25 years.

    • If the purchase price is between $500,000 – $999,999 a higher down payment is required. The minimum down payment is 5% of the first $500,000, and 10% of the remaining amount.

    • Mortgage default insurance is not available on homes purchased for more than $1 million; this means that a 20% down payment is required on these homes.

    Where do you get mortgage default insurance?

    There are only three companies that provide this insurance in Canada; Canada Mortgage and Housing Corporation (CMHC), Genworth Financial and Canada Guaranty. All three of these companies charge the same rates for the insurance.

    During the signing of a mortgage, your lender already has the cost of the default insurance worked into the final amount for the mortgage, so you do not have to deal with the insurer. Even when you are completing a purchase plus improvement mortgage, the lender dictates all communication with the insurer.

    Start the conversation!

    A BVM Contracting Renovation Consultant is uniquely positioned to help you navigate the crazy world of mortgages. To learn more about how we help homeowners with finding the right mortgage for their needs please feel free to contact us. Looking forward to starting a conversation.

    ABOUT BVM CONTRACTING

    BVM Contracting is a full-service General Contractor or Home Builder located in Toronto. We provide home renovation and building services for major home renovations (kitchen renovations, bathroom renovations, basement renovations, full interior renovations, home additions, and new home construction). Our goal is to help guide our clients through the process of renovating their home, from concept to completion.

    Further than providing General Contracting and Project Management for major home renovations, we also offer value-added services such as renovation financing, renovation rebate consultations and services, building permit and design services, smart home installation services, and real estate investor services.

    To learn more about our offering by visiting our services page.

  • Purchase Plus Improvement Mortgage

    Purchase Plus Improvement Mortgage

    Purchase Plus Improvement Mortgage

    Benefits

    A purchase plus improvement mortgage is an option that some mortgage lenders offer homeowners for completing renovations to a property. In essence, the lender (and sometimes the insurer) evaluates the cost of your proposed renovations and then adds that cost to your mortgage. This essentially locks you into adding value to the home which, in many cases, works out for the person buying the property because they were probably going to do those renovations anyway.

    How Much of a Down Payment is Needed?

    You can get qualified for this program with only a 5 % down payment, which makes this program accessible for many people!

    How Much Money Can I Gain Get for Renovations?

    You are eligible for up to 20% of the purchase price of your home, but if the renovations are over $40 000 an appraiser is sent out to look at the property and determine the value of the renovations being completed.

    What are the eligible properties for this Mortgage?

    • Maximum four units with at least one unit occupied as the principal residence.

    • New construction or existing properties.

    • The property of interest must be valued at less than $1 000 000.

    Borrower Qualifications

    The following criteria are used in determining if an applicant(s) qualifies for this type of mortgage:

    Income and Employment

    Standard income and employment verification requirements apply.

    Credit

    • > 80% LTV: At least one applicant is required to have a minimum credit bureau score of 600.

    • ≤ 80% LTV: At least one applicant should have a minimum recommended credit bureau score of 680.

    Down Payment

    Qualified home buyers may use traditional down payment sources including personal savings, RRSP withdrawal, non-repayable gift from immediate family member(s), sweat equity, existing home equity, proceeds from sale of property.

    Government grants may be considered if pre-approved by Genworth Canada.

    Types of renovations approved

    Usually, any renovation that adds value to a home is one that gets approved, but below is a list of renovations that normally get approved for this program:

    • Roof

    • Flooring

    • Wiring

    • Windows and doors

    • Energy efficiency

    • Basement

    • Kitchen

    • Bathroom

    • Living room

    It is important to note that you can also combine any of these renovations as well!

    Step-by-step instructions to Get THIS mortgage

    Step 1: Obtain a Mortgage Pre-approval

    From your mortgage broker (or bank that completes purchase plus improvement mortgages) the first step is to always get pre-approved for the amount that you are looking to take out for the mortgage. This should include the mortgage default insurance and quoted cost of the renovations that you are looking to do to your house of interest!

    This step can be completed after Step 2 but is not recommended.

    Step 2: Find a Home that Needs Fixing and Figure Out Cost of Renovations

    There are many fixer-uppers in Toronto just waiting to be loved! Many young people may be priced out of the majority of the Toronto housing market so being able to find a fixer upper and putting in some renovations to make it your own might make more sense.

    Lenders require that you get written quotes for the scope of renovations that need to be completed from a qualified contractor, which is where we come in! BVM Contracting will be able to provide a quote for any of the above renovations and will be able to help guide you through this process since we have done it before!

    It is important to note that the cost of the renovations added to your mortgage cannot exceed your maximum approval amount.

    It is also worth noting that if the renovations are valued higher than $40 000 that you will need to get an appraiser in to assess the house and verify the costs of renovations. This should be completed before the offer is sent in and accepted, just in case the value of the renovations (and therefore how much money you receive) is less than the quoted amount. This happened with our clients at 93 Prairie Drive but they ended up still moving forward with their offer.

    BVM Contracting has a Renovation Consultation Service tailored to helping people determine the cost of their renovations at this stage of the home buying process. Learn more about this service here.

    Step 3: Put an Offer in on the Home!

    Once you get quotes in and determine that your mortgage plus improvements are less than your pre-approval amount, put an offer in on your fixer-upper home! Once the offer is accepted you will have to provide the renovation quote and the accepted offer for buying the property. Your broker or bank will have the lender approve the mortgage with the outlined costs of the renovation.

    Step 4: Start Your Renovation Engines!

    Once you take possession of your home, you can begin the renovations. Before this happens, ensure that you have the correct building permits in place for doing the work if you are making any large adjustments to the home (structural, plumbing, etc.). With BVM Contracting’s Design-Build Services, we will be able to get you connected with an architect that can help you get the required permits for your renovations.

    The Lender will instruct the Solicitor (Lawyer) to hold the additional Renovation funds for the duration of the project, until the lender confirms the works has been completed. Once the renovations are completed, notify your mortgage broker and they will order an inspection from an appraiser to verify the work outlined in the quoted scope of work is completed as per the quote that was provided by your contractor.

    It is important to start the renovations as soon as you take over ownership if you decide to go with the purchase plus improvement mortgage.

    Step 5: Final Inspection and Disbursement of Funds

    With the inspection completed, the lender will receive the inspection report from the appraiser, and validate that the work has been completed in a good manner and as per the quotes provided. They will instruct the lawyer that they are able to release the funds to you, to pay the contractor. The initial release of funds is 90% of the improvement portion of the mortgage. The remaining 10% is subject to a hold-back pursuant to the construction lien act S. 22. You will be able to get access to the remaining 10% after 45 days, from the date of when the lawyer was told to release the initial 90% of funds.

    Note: Make sure that your contractor knows the timeline for completing the outlined renovations, so that you do not default on getting the funds after the renovations. Usually the timeline is 90-120 days depending on the renovations being completed.

    It is equally important to note that the lawyer will charge a fee to disburse the funds, which is around $150.

    Additional Advice for People Interested in This Mortgage

    Since BVM Contracting has completed renovations with purchase plus improvement mortgage holders, we have in-depth knowledge in how to most efficiently complete these renovations on a tight timeline and budget. We also offer renovation financing to additionally supplement any additional renovations not covered by the purchase plus improvement mortgage.

    Additionally, we have created a case study for our recently completed purchase plus improvement project at 93 Prairie Drive. If you want to learn more about how a real-world couple took advantage of a few different financing options to afford the renovations of their dreams and also subsidize their mortgage with a legal basement apartment.

    If you are interested in getting a quote for your potential renovation of a property feel free to start the conversation by contacting one of our Renovation Consultants or filling out our contact form!

    ABOUT BVM CONTRACTING

    BVM Contracting is a full-service General Contractor or Home Builder located in Toronto. We provide home renovation and building services for major home renovations (kitchen renovations, bathroom renovations, basement renovations, full interior renovations, home additions, and new home construction). Our goal is to help guide our clients through the process of renovating their home, from concept to completion.

    Further than providing General Contracting and Project Management for major home renovations, we also offer value-added services such as renovation financing, renovation rebate consultations and services, building permit and design services, smart home installation services, and real estate investor services.

    To learn more about our offering by visiting our services page.