Purchase Plus Improvements

Does the home you are purchasing require upgrades or renovations? Will a new roof, central air, a new furnace, upgrades to the electrical or plumbing system, new doors, windows, a new kitchen or bathroom, or any other renovation increase the value of the home?

With a Purchase Plus Improvements mortgage product you can add the cost of these renovations to your mortgage at the time of purchase.   This is how it works.

At the time that you're submitting your mortgage application for approval, you provide a written quote from a licensed contractor detailing the improvements with estimated costs. Your application is submitted and approved for a mortgage in the amount of the purchase price plus the improvements.  The lender will instruct your solicitor to hold back the cost of the renovation work. Once the work has been completed, the increase in the value of the home will be confirmed by an appraiser. It is then that the lender will instruct the solicitor to release the held back funds to you to pay your contractor.    

You have found a home to purchase for $150,000, you have a 5% down payment, and would like to add $25,000 worth of improvements. 

  • Purchase Price of Home = $150,000.
  • Contractual Estimate of Improvements = $25,000. 
  • $150,000 + $25,000 = $175,000. 
  • Lender and Insurer Must Approve Home Value of $175,000. 
  • Minus 5% Down Payment of $8,750.
  • Total Mortgage Amount = $166,250.

Your Lawyer will register your mortgage for the amount of $166,250 but be instructed to hold back $25,000. Once your Contractor completes the improvements within 90 days, an Appraiser will confirm the completion and your lawyer will be instructed to release the $25,000 held back so you are able to pay your contractor.

Everyone is a winner! The purchaser is happy because they got $25,000 of improvements done to the home, with payments spread out over the amortization of the mortgage. The lender is happy because they now have a mortgage on an improved home!