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Purchase Plus Improvements Mortgage – What is It?

A purchase plus improvements mortgage is ideal for home buyers who have found the home for them, but know it is going to take a little TLC to meet all their needs. Instead of applying for a mortgage, buying the home, and then applying for another loan (or trying to save up some money) to do the renovations a purchase plus improvements mortgage contains extra money on top of the mortgage amount, for you to do all the required renovations.

Benefits of a Home Improvement Mortgage

The huge benefit of getting a purchase plus improvements mortgage is that you can start doing all your desired renovations as soon as you take possession of your new home. Any mortgage broker would also agree that another huge benefit is that the home loan and renovation loan is rolled into your monthly mortgage payments – giving you one less thing to worry about.

Banks that offer a Purchase Plus Improvements Mortgage

Homes are so expensive these days, so more and more people find themselves somewhat dated homes that require a little face lift. Because of this, purchase plus improvement mortgages are extremely common.

Some of the lenders currently offering purchase plus improvement mortgages are:

    -Genworth Canada
    -Canada Mortgage and Housing Corporation
    -First National

Can I get a Purchase Plus Improvements Mortgage with Scotiabank?

Scotiabank does not have a dedicated purchase plus improvements mortgage at this time. The closest thing they do have is their extremely popular “STEP” program – which is essentially a line of credit you apply for at the same time as your mortgage.

Getting a Purchase Plus Improvements Mortgage with CIBC

CIBC has two dedicated products for home renovations – their CIBC Home Power PLAN and their CIBC Home Power Mortgage. The former is a combined mortgage and line of credit. As you pay down the mortgage, the available money in the line of credit goes up, which is perfect if you decide to do more renovations down the line.

CMHC Purchase Plus Improvements

CMHC’s program allows buyers to borrow up to 10% of the as-improved value of a home. This amount can be used towards renovations and is conveniently included in the mortgage loan amount (again only one monthly payment). This program is great for people like first time home buyers who have small down payments and wouldn’t be able to afford and renovations on top of their down payment.

Getting a Purchase Plus Improvements Mortgage with RBC

RBC offers several home improvement financing options depending on how small or large your project is. For a big renovation RBC offers the RBC Homeline Plan. This is a mortgage and line of credit under one plan. Applicants can qualify for this program with a minimum of 20% home equity.

A mortgage broker makes applying for a purchase plus improvements mortgage fast and easy.
A mortgage broker makes applying for a purchase plus improvements mortgage fast and easy.

How to Get a Purchase Plus Improvements Mortgage

While all lenders have their own specific processes, the steps below are generally the path that most lenders will take during the process of applying for a purchas plus improvements mortgage.

Step 1

Select the home you wish to purchase and know what renovations will need to be done. Have a rough quote of what all the renovation work will cost.

Step 2

Your mortgage broker will work on your mortgage approval application based on the current state of the house (pre renovations).

Step 3

Have a contractor provide firm quotes on all the renovations you need to have done.

Step 4

Your mortgage broker will revise your mortgage approval to include the cost of your home renovations.

Step 5

Once your full mortgage is approved you can take possession and start doing the renovations immediately.

Step 6

Once the work is complete, and lender representative will inspect the work to confirm it was completed and required.

Step 7

The money is released to you to pay for the completed renovations.

Step 8

Enjoy your newly updated home!

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