Improvement loan - an integral part of the mortgage?

[Nir]

Following a bank`s mortgage approval, a representative from the same bank called to ask if I require any additional assitance/credit for expenses related to the property/purchase. Is such a loan/credit usually defined by the bank as an "improvement loan" (for things like new roof fixing a wall, fire coding the property, etc.) SEPARATE from the mortgage and with worse conditions (higher rate) or can it actually be an integral part of the same mortgage, simply increasing the mortgage, once I state the amount to the bank? Also, any tip regarding the best use of this option the bank offers would be highly appreciated. THANKS.

 

[GarthChapman]

It sounds like what the bank is offering would not be a part of the mortgage, and I suspect you would have to comnmit to using the funds to improve the subject property.

Check this post about a great new product that may be a more effective and less costly way to achieve the same results (2nd mortgage funds in a line of credit at prime!). It is from Peter Kinch`s Canadian Mortgage Team.

Exclusive REIN Member Financing Announcement, Amazing L.O.C. for Rental Property Equity Take Out!

You may want to post this in the `Ask an Expert - Financing sub-forum as that may result in more expert responses.

Hope that helps,

 

[RobMacdonald]

I`m suspecting that the bank is `cross-selling` you another product. A line of credit to help with closing costs, new furniture, moving expenses is usually an easy one for them to sell. The other popular offer is overdraft protection for an amount similar to the mortgage payment.

Consider your opitons. Sometimes this products can be attractive when combined with the mortgage. You may qualify for special rates or discounts, which may make sense in the long run.

The purchase plus improvements program, as part of the mortgage is only eligible when improving the subject property.