Did you know that with certain lenders you can buy your next property and build some of the renovation cost into the mortgage? You can, and certain lenders partake in this program which is called Purchase + Improvements! 

You buy your next house, say for $600,000. The lender will “reimburse” you up to 10% of the purchase price (in this case $60,000) for renovations “completed” on the property. I mention reimburse and completed as you have to pay and do the renovation first in order to get reimbursed. Once completed the mortgage for $600,000 is now $660,000, so this means you must qualify for your total end mortgage including the extra 10%. 

The funds can be used for many different parts of a renovation. I’ve had clients build garages, flooring, electrical, kitchens, bathrooms, finish basements, build wet bars, complete a suite… However the funds cannot be used towards anything like appliances or furnishings. So if doing a kitchen of any sort, plan to pay out of pocket for the appliances. 

The lender will also have a timeline that you must complete the renovation by in order to complete the program. So it is not something you can plan to renovate in 6-12 months. As soon as you get possession of the property, you hit the ground running! You often only have around 90 days to complete your renovation and when complete, you contact your mortgage broker / lender and they will send out an inspector to verify the work is complete for the finishes your claiming. After that the refund is processed and mortgage adjustment made. Some lenders may give some flex on the 90 days. However it appears most want it done within a fairly short period of time. So you are best to try to plan out, measure, and order everything as soon as possible. I’ve had many buyers use the many hours during their property inspection, to meet with different trades and companies to quote, measure, plan. 

Though the deadline is for sure stressful, a positive to this deadline is you get your update sooner and it is really a great tool to get the renovations and improvements your after. House is perfect but doesn't have the garage and you have room on your credit to fund it prior. Why not build the garage the way you want it to be built and have it included in the mortgage like it was already there!

Insuring your home consist of many factors to generate the end premium. Criteria many people are not aware of! Knowing some of this when buying your next property will help prepare you for the insurance portion of the property.

You yourself are thoroughly reviewed; from things like your martial status, age, occupation, claims history, and importantly… your “insurance score”! An insurance score is almost like a credit score as it’s generated by your credit and where it sits. Insurers cannot see your actual credit score, however they can often tell if it is good, bad or median by the range it sits by how their systems reacts with premium. This is why its hard to compare yourself to someone else’s insurance as you are not comparing apples to apples. A different credit score alone will cause a huge fluctuation in premium. 

• Example, I insured 2 neighbours with very similar properties. The one side, couple in their mid 50s, no claims with a less favourable insurance score. While the neighbours, late 30s, no claims, and a great insurance score. The younger couple premium was substantially less by almost half, which naturally you would think the older couple should be less.

  • Tip, if multiple owners. List the owner with the better credit score on the policy first,  then follow with the other names. Many insurer systems go off the primary person first listed to the policy.

  • Tip, work to try to rectify lower credit scores to help assist with saving on insurance premium. Each year when a policy renews, the rates will update to reflect it.

Next comes the property and home, where it’s thoroughly judged. It’s geocode location pulls the information in on how that specific postal code & area rates for all the different types of claims! Premium ratings and the chances of risk are generated from the different zones for each category; water zones, flood zones, house fire zones, weather zones, wild fire zones, earthquake, crime and other. This is how we all share claims, as even if we don’t have a claim ourselves and are not being charged for direct claim. The ratings for the different zones can be higher in certain areas due to losses of others. That is why each year, your policy premium will fluctuate. Which is from cost of living/inflation, rate fluctuations, along with changes in your insurance score. 

• Example, If there are a lot of house fires in a community (older community) more of the premium distribution may be impacted by the house fire rates. Which a mix of rates on the back end of things could look like the following. 40% of my premium is based off it being a higher risk for house fires, 30% weather, 15% extended water, crime 13%, other 2%, wildfire 0%. 

• Example, Alberta’s Hailstorm Alley - a colloquial term referring to an area of south and central Alberta, Canada where hail storms are frequently produced. These storms frequently produce hail that is damaging to property. This area stretches from High River in southern Alberta, northward through Calgary, through Red Deer to Lacombe and then westward to Rocky Mountain House.[1] Believe it or not, it is known to be one of the worst areas in the world for damaging hail produced by thunderstorms!

  • Did you know the recent Alberta August 2024 Hailstorm will be one of the worst storms ever for hail damage for majority of the insurance industry!

Then comes the build and finishes of your home. This generates both the replacement cost to rebuild your home to new. As well how everything rates against the different risk with the products used and their ages. Age of all, matters! The building, electrical, plumbing, roof, furnaces, and hot water tank all important factors towards generating that risks and premium. Premium wise, newer will always cost less over something old, and that is just because new means lower risk and less deterioration.

• Harder sidings such as stucco, stone, brick, metal will rate lower then vinyl siding or wood siding. Vinyl and woods damage easier.

• A Metal or rubber roof will rate lower then the standard asphalt, as they are also harder to damage.

• Gas fireplace over wood / stove rate less, as you don’t have the same sort of combustion. Lots of fires happen when the fires is out and its the chimney that caught fire / the pieces within the duct. 

  • Example, recently was a house claim on a newer built home. Fireplace was WETT inspected and even repaired in order to pass certification. Owners had fire going around 7pm and thought was out around midnight. The elbow / ductwork inside the the roof is what caught fire and burnt the whole house down within minutes between 2-3am, long after the fire was to be out! 

    • Tip - Make sure you have an approved copy of a WETT inspection for a wood fireplace if a claim happens. Often insurance adjusters expect / request a copy of this report to serve as proof you did your due diligence to ensure that the fireplace was safe and operable in the first place for use! Often there can be some responsibility that falls on the insured in order for a claim to be processed.

• Type of electrical wiring such as copper instead of the not allowed aluminum.

• Type of plumbing from cooper, pvc, pex to the restricted poly b and galvanized. 

• Have preventive features like a sump pump, back flow valve, monitored alarm system. 

Insurance is something we all have a need for. Protect ourselves, our assets, along with others! Knowing the details and how things work with insurance will help smoothen the overall process. An educate you towards a sound decisions in choosing the right insurer. Remember insurance should always be based on coverage first, then price! You want competitive coverage for a competitive price, from a reputable insurer. What is saving $500 a year over 3 years to = $1,500 saved, when the $50,000 claims only pays out $25,000!

Have an insurance question? Ask me :)