<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=294326554740919&ev=PageView&noscript=1" /> What is ‘Purchase Plus Improvements’? - Wilson Sisters

What is ‘Purchase Plus Improvements’?

22 January 2013
Wilson Sisters

Our favorite mortgage broker, Rob Clancy of Safebridge Mortgage Solutions, recently sent out this article on Purchase Plus Improvements. We thought we would incorporate it into a blog because it addresses a product that doesn’t seem to be widely used. This handy mortgage product allows the buyer of a property to add some renovation costs onto the mortgage when setting the mortgage up. The renovations must improve the value of the property. Rob has assured us that when the renovations stay within the guidelines for home improvements that would add immediate value to a home (ie new flooring, roof, windows, kitchen or bathrooms) there’s no problem with getting approval. Something like a $10,000.00 Persian carpet is not going to fly!

A quote or cost estimation of the renovations has to be submitted at the same time as the mortgage approval for the purchase. On closing the mortgage funds plus renovation funds are sent to the lawyer. The lawyer is instructed to hold back the renovation funds until the work is completed. Upon completion, an inspector from the mortgage lender will come out to the property to make sure the work is complete. Typically you’d have 60 days to complete the work after closing. If it takes longer it shouldn’t be a problem however it is prudent to get the work done in adequate time. Once the inspector signs off on the work the funds are released to you to cover the cost of the renovations and added to the mortgage by the lender. Please note you must have access to funds to complete the renovations first or have a contractor who will do it up front and get paid when work is complete.

The main points to remember are:

  • Maximum loan amount $40,000.00.
  • Available on owner occupied and investment properties.
  • Available on high ratio and conventional mortgages.
  • Client receives the same interest rate as with a regular mortgage and if insured the premium is the same. No extra costs.
  • A detailed quote/cost sheet for renovations must be submitted with the mortgage approval application. The quote/cost letter submitted must be from a contractor or home hardware store with all taxes etc included. An option is to go to Home Depot or Rona for an estimation. You can do the renovations yourself but the estimation with detailed cost must come from a professional.

This is a great product that many people don’t know about. If you have any more questions, we’ll hook you up with Rob – he knows his stuff!