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Everything You Need to Know About Purchase Plus Improvements Mortgages

This Renovation-Friendly Mortgage Might Be Right For You – Learn More

The housing market might have some cool finds here and there, but does it have your dream home?

As a buyer, you might have a clear idea of what you’re looking for in a home – the size, the price, the neighbourhood, and the interior design. If someone asks you to describe your ideal kitchen, bathroom, or basement, you can give a detailed answer off the cuff.

If you have a dream home in mind, or you’d simply like to be a decision maker in the home you’ll be living in, the Purchase Plus Improvements Mortgage might be right for you.

This mortgage allows you to buy a home that could simply use a few upgrades – and select the renovations yourself, with all fees combined in the mortgage. Learn more about this kind of mortgage below!

What is a Purchase Plus Improvements Mortgage?

As the name suggests, this type of mortgage involves a ‘purchase’ (the home) and ‘improvements’ (renovations).

What does this mean, exactly?

You might find a home that has almost everything you like – it might be the right size, or in the right price range or the right neighbourhood. But the home needs a few fixes – say, the basement needs to be finished, or the kitchen needs new flooring to match the appliances.

The Purchase Plus Improvements Mortgage allows you to buy a home and perform upgrades – all in one payment.

This allows you to buy a cheaper home and customize its renovations. Many sellers will renovate themselves to drive up the price of their home, but this option benefits both the buyer and seller. The buyer benefits by paying a lower price for the home itself and performing the upgrades that they want. The seller benefits by not having to participate in the renovation process in any way – they can simply sell their home in its current form.

How Does It Work?

The process begins with you – when you are pursuing a property, determine what renovations you would like to perform and roughly how much they will cost.

Then, speak with a mortgage broker. Your broker will start by getting you approved for the house in its current form. Then, you’ll be ready to move on to renovations – you’ll start by getting firm price quotes for the work you’re interested in completing. In most cases, you’ll need a licensed contractor to be listed on these quotes.

Your broker, at this point, will submit your mortgage applications with the quotes for renovations you would like to do.

You can begin issuing the renovations when the sale transaction takes place. The renovations must be verified to ensure that the costs indicated on your mortgage agreement are correct. You’ll receive money to pay contractors as per your mortgage agreement once the renovation work is complete

What Work Can Be Included?

There is no concrete list available of what can and cannot be performed as part of a Purchase Plus Improvements Mortgage. Ultimately, it will depend on what your lender is willing to accept.

However, renovations that are accepted are usually permanent in nature or improve the resale value of the home. These might include flooring, roofing, or a new kitchen, for example. Simple home upgrades like new furniture wouldn’t be likely to qualify.

Curious about eligibility? In most cases, you can borrow up to 10 percent of the home’s purchase price for renovations. For example, if a home’s price is $525,000, you can borrow up to $52,500 – which is 10 percent – for your upgrades. Note that any renovation above $40,000 requires an exception by the lender or insurer.

Additional Considerations

Mortgages involve a lot of careful thought. The Purchase Plus Improvements Mortgage might seem like the perfect deal, but you should think carefully about your decision to avoid pitfalls. Here’s what you should keep in mind.

Timing of Funds Being Released

With a Purchase Plus Improvements Mortgage, timing is everything. In most agreements, you’ll need to complete renovations within 90 days of receiving your funds.

However, the funds might come to you later than expected, and you may be required to find funding for renovations yourself (through a credit card or even out of pocket) and then get reimbursed afterwards. However, with most contractors, payment is not required until the work is completed, so you likely will not need much cash upfront.


One of the most important steps to take when securing this kind of mortgage agreement is to get quotes for your renovations in advance. These must be precisely accurate, as they will affect the funding you get for renovations. You may be penalized, or your mortgage agreement may be in jeopardy, if your quotes are not accurate. Speak with your lender or a mortgage broker if something changes.


You are contractually obligated to get the mortgages as indicated in your agreement. An appraiser will inspect your home to ensure that your renovations match up with what you had agreed to get for your home. If your appraiser can confirm that you kept up with your end of the deal, you’ll pass their inspection. Following that, they’ll tell the lawyer to release funds to you so you can pay your contract.


With a Purchase Plus Improvements Mortgage, you might be one step closer to living in your dream home. If you want to be involved in the renovation process without having to build a home from scratch, consider choosing this mortgage.

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