What is a Purchase Plus
Improvements Mortgage?

Oftentimes, after securing a mortgage, paying out a down payment, closing costs, moving costs, etc. the idea of taking out a line of credit with a bank or having to finance renovations can seem unappealing and unrealistic. This is where a Purchase Plus Improvements Mortgage can help you!

With this type of mortgage, you can fine-tune your home to just the way you like, by using the funds included in the total amount you borrowed for your mortgage. You can upgrade the home immediately upon you moving into it, thereby creating your dream home.

Just how much could you obtain for home renovations? Providing that you meet all lender mortgage application qualifications, you may qualify for up to 20% of the purchase price or $40,000 (whichever is less) for improvements and upgrades that can be done to increase the overall value of the home.

The process to qualify for a Purchase Plus Improvements Mortgage is:

• You must provide a list of planned improvements to the home. This should be a detailed list that not only includes the improvements themselves, but also quotes from service providers and quotes on materials at the time of the mortgage application.
• A lender will then value at the home based on the value of the aforementioned planned improvements. As this is the new amount that the lender is working with, the amount required for a down payment will be based on this revised number.
• Labour options to have the work completed on the home include hiring a company or contractor or you can also opt to do it yourself. Keep in mind that only the cost of materials, not voluntary work on the home by yourself, can be funded by the advance.
• When the work has been completed an inspection report will need to be formulated by a certified appraiser. This will confirm that the work meets all code requirements and standards.
• After the appraiser has confirmed the workmanship, the lender will approve the report and the lawyer/solicitor will be advised to release the funds. Any remaining funds from the advance (ex. If the improvements cost less than expected) are applied back against the mortgage.

There are also a few things to consider about this type of mortgage. The property value must be less than $1,000,000 to qualify for this type of mortgage. You must be able to put a minimum of 5% down payment towards the property. Also, this type of mortgage is only allowable for purchases with less than 20% down payment.

Purchase Plus Improvements Mortgages are a fantastic option in today’s market. It allows you to consider purchasing a fixer-upper and having the funds readily available to make the home your own, without having to take out an additional line of credit. If you are interested in this mortgage solution, it would be our pleasure to walk you through the process. You can also apply in minutes with our quick and easy online mortgage application!