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A fantastic option available through many lenders is called a Purchase Plus Improvement Mortgage. This mortgage allows buyers to purchase a home and have extra funds available to complete renovations on the property. If you are looking to buy a home that may need renovations done, a Purchase Plus Improvement Mortgage is a great option for you to consider.

Product FAQs

How much money can I receive to do renovations with this mortgage?

The Canada Mortgage and Housing Corporation (CMHC) Purchase Plus Improvement Mortgage program allows you to borrow up to 10% of the post-renovation value of your home. For example: If you purchase a home for $300,000 and the renovations will improve the value of the home by $30,000 your home will be worth $330,000 after the renovations are completed. Therefore, you could borrow $33,000 or 10% of the improved value of $330,000

If I need to update the electrical wiring and I have experience to complete the job myself, would a Purchase Plus Improvement Mortgage pay me to do the work?

No, a requirement of a Purchase Plus Improvement Mortgage is to have a contractor hired to complete the renovations on the property.

Are there specific renovations that can be completed with a Purchase Plus Improvement Mortgage?

The process is as follows: It is a requirement for you to receive a quote from a reputable contractor to be submitted to both the lender and CMHC (if applicable) for approval. This will specify the work being completed on the property.  Not all renovations you may wish to have done will necessarily be approved by the lender. Generally, the lender will consider approval for renovation funds that are significant and will involve the structure of the property.  A good example is a new kitchen. Adding a basement suite or replacing a furnace may not be approved.

Can I purchase new appliances through a Purchase Plus Improvement Mortgage?

No, anything that is not affixed to the home and could be removed would not be approved by the lender or CMHC.

How do I pay the contractor for the renovations being completed?

When the purchase is completed the lender will forward the dollar amount you are borrowing for renovations to your lawyer. The lawyer holds these funds “in trust” until the renovations are complete. Then an appraiser will view the home and provide a report to the lender confirming the renovations have been completed and will reference the original quote.  Next, the buyer will receive the renovation funds to pay the contractor for the work that is completed from the lawyer.  Since CMHC and the lender will require the work to be completed prior to release of funds, you may be obligated to pay the contractor a deposit or for progress payments. Talk to your mortgage broker about options to assist you with these payments.

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