Fixer Upper Financing
Fixer-upper-financing is not as straight forward as other types of residential mortgages. You have to be willing to provide more "business" information to satisfy the lenders.
On the other hand, fixer-upper-finacing is the easiest form of business financing. If you have never done any business financing, you will find the process very cumbersome. However, assuming your success with fixer-uppers, it is good training for bigger deals in the future.
Here's the process for fixer-upper-financing:
Step 1. Buy the old house with as much financing as you can get. You should be able to get as much as 90%, even as an investment property and up to 100% if you are going to live there.
Step 2. Apply for financing based on the value of the completed house after renovations. You will need all the deails of what changes you are making to the house, how much it will cost, how long it will take and the schedule for everything happening.
You will need a formal appraisal to establish the value of the house after renovations.
Step 3. Get
to approve you for financing between the time the bank financing kicks in and having to pay for the renovations.
The bank will provide financing AFTER the renovations are completed up to certain stages. In most cases you will be allowed up to three draws. Each bank is different in defining the exact time they will give you some money. Your mortgage broker can help you get the right financing package to suit your needs.