Purchase Plus Improvements

What is it, and how does it work?

The purchase plus improvements program allows you to add on the cost of the improvement to your mortgage. Here is how the program works: You’ve found a house that you like but it needs improvements such as basement development, kitchen renovation, new flooring, etc. The Purchase Plus Improvements program will allow you to add the renovation cost to the purchase price, so you can benefit from a low mortgage interest rate and make only one payment.

Before we can submit this type of transaction to the lending institution, you will need to supply quotes and/or a renovation contract from a renovator. If you will be renovating the property yourself, we will need a copy of your resume detailing your skills as well as quotes from a supplier such as Home Depot or Rona. Since, in today’s market, subject removal days are short, you will need to have the quotes/contract available a few days before subject removal date to give the lender some time to process the transaction.

One of the first misunderstandings with Purchase plus Improvements, is that most people do not realize that they will have to pay for the renovations themselves until the work is completed. The lender will mandate that the solicitor to “hold back” the additional cost added to the mortgage, that represents the improvement amount. Once the work has been completed, an appraiser will have to supply the solicitor with an inspection report, which tells the solicitor all the work has been completed as agreed. Only then, can the solicitor release the funds from his trust account, to pay for the improvements. It is possible that the insurer, Genworth or CMHC will want to perform an appraisal of the property, at their cost, to confirm the work to be completed.

For example, if the house is priced at $300,000 but needs another $20,000 in renovations, you can add in the renovations cost to the purchase price and CMHC or Genworth will lend against the total value (purchase price plus the renovation cost).

  • Purchase price $300,000
  • Renovations $20,000
  • Total cost $320,000
  • Lending value $320,000
  • Max. Mortgage $304,000 (95% of $320,000)
  • Min. down payment $ 16,000

Please contact us today to for any further questions about the Purchase Plus Improvements program or to apply today.