Looking for our MIC/Alt Lending? tekfund.ca

Close

Build the costs of renos into your original mortgage

Purchase Plus Improvements

Main image for Purchase Plus Improvements mortgage product

It's not perfect, but it's close!

There's almost always compromises when it comes to buying a home. Sure, the yard is perfect, but the bathroom is straight out of the 70's. Or maybe it has a beautiful kitchen, but you were really looking for a place with a mortgage helper. When you're looking for your home, it feels like there's a million things to keep track of and trying to leave room in your budget for work after you buy the place can get tricky.

That's where a purchase plus improvement (PPI) mortgage (sometimes known as a renovation mortgage) comes in. Basically, it means when you purchase, the bank sets aside up to an additional 40,000 (or a max of 10% of the purchase price) to be used towards property improvements.

How does it work?

Let's say you find a home to buy for 500,000. It's nice, it's got a great shop and the master bedroom is beautiful. There is only one issue - the roof is covered in moss and needs to be replaced pronto. Now let's say you have 30,000 to put down as a down payment. A new roof will cost another 25k. If you bought the house, you could risk the entire investment by having your roof fail on you. A perfect scenerio for a purchase plus improvements mortgage! Here's the steps:
1. You get an accepted offer for the home at 500k, your broker works with you to get a mortgage
2. You get a quote for the roof repair for 25k
3. The broker gets you approved for a PPI mortgage of 525k
4. The lender approves, and the mortgage funds (you buy the home for 500k)
5. At closing, the lender sends an extra 25k to be held in trust by your solicitor
6. You now have 90 days to get the work done.
7. Once the work is complete, an appraiser visits the property, confirms the work is done, and the solicitor releases the 25k held in trust
8. You pay the roofer for the new roof.

Seems complicated..

It is and it isn't. They're a fantastic product, and so long as you have a good mortgage broker on your side, they're a great opportunity to get the house you want with the renos you want without having to wait. Using this program, you can include anything from hot water heaters to kitchen renos in your mortgage. Some things you could include are:
- New Kitchen/Bathroom
- Flooring/Paint
- Furnace/Hot Water Tank
- Helper Suite
- Siding, windows, roof or gutters

It really comes down to creativity at some point. There's a lot happening and we strongly recommend you speak with a mortgage broker about these fantastic renovation mortgages. Even if you haven't found the right house yet, knowing you could have extra in your budget to get the work done might open up your list of potentials to a lot more than you first thought!

Back to all Mortgage Products
Top