Financing for a Power of Sale

Bank-Owned Properties in Guelph There is no shortage of buyers interested in purchasing a distressed property in Guelph. In fact, I field inquiries about bank-owned properties on a regular basis. It’s hardly a surprise; buying a fixer-upper can be a great investment strategy… if approached correctly.

Most often, I’m asked about the possibility of buying Foreclosures in Guelph. In this region, bank-owned properties typically fall under the category of a Power of Sale, not a Foreclosure. (Here’s the difference, by the way.)

Buying a Guelph home sold under Power of Sale can present an opportunity to get a good price on a home, but there are plenty of considerations. Among them? Financing. Will you have trouble getting a mortgage on a bank-owned property? That depends.

Guelph Mortgage Expert Rob Campbell notes that qualifying these properties for financing involves the same general process as with any other property. “Both the Lender and Insurer will request a full appraisal of the property,” he explains, “and some may request an inspection by a Licensed Inspector.”

The purpose for which you’ll be using the property also has some bearing on your mortgage options. If, for example, you are buying the property and intend to live in it as your principal residence, there are some flexible options when it comes to funding improvements, if the home is in a state of disrepair. “Through a Mortgage Broker,” says Campbell, “you can enroll in a ‘Purchase Plus Improvements’ program through CMHC. This will allow you to borrow the ‘As Repaired’ value of the home and give you the funds to contract the work out.”

For investors who intend to flip or rent out the property, mortgage options are different. Campbell points out that, for investors, “both down payment requirements and Interest rates can start to rapidly increase, because the Lender sees the risks of an investment ‘Project’ as higher than those for a buyer of a principal residence. As a result, the costs of borrowing rise along with that risk.”

For more information on buying distressed homes in Guelph, please feel free to contact me.

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