You’ve been searching for a home; you find a home that has a lot of things on your list of what you are looking for. The only issue is that it requires some renovations and you don’t have the excess finances for those renovations. That’s where a purchase plus improvements mortgage comes in.

Many people are not aware that they can add renovation costs to their mortgage. CMHC did a survey and found that 37% of mortgage consumers that took part in the poll did not know about the purchase plus improvement mortgage options. This mortgage program covers not only the purchase price of your home, as well as the additional money to cover renovation costs. The cost of borrowing is put all into one payment, simplifying it to purchase your home and renovate it once the deal has closed.

How does this program work? And what are the steps to adding in the purchase plus improvements mortgage? The very first step would be to determine that improvements need to be done. An example would be if your home needs a new floor, paint, kitchen renovation, or appliances that need to be replaced? It’s recommended to seek 3 quotes from contractors to make sure that you are getting the best quality service and price. Speak with your broker about the improvements and they will line up the financing approval that will include these costs. Once you have determined the renovations and costs, you will go through the standard home buying process. After the sale closes and you take possession of the home, the lender will forward the agreed-upon costs of the renovations to your lawyer, who will hold that as cash in trust. Your contractor can start the renovations that were agreed upon with your lender right away. The work typically must be complete within 90 or 120 days. Once your reno is complete, the lender will send a representative to take a look at your home. Once approved, your lender will provide the money needed to pay your contractor.

For further details about this program or in the event this mortgage program isn’t what is right for you, your broker can go over other methods of  borrowing against home equity

Call us anytime to ask about the different programs and options for your mortgage needs.