Many clients ask me if they can roll renovations into a mortgage. You can, with the Purchase Plus Improvements program. Let’s break down how this works and why it might be the perfect solution for you.
The Purchase Plus Improvements Program
The Purchase Plus Improvements program allows you to include the cost of home renovations in your mortgage. This means you don’t have to take out separate loans or drain your savings to make your new home perfect. Instead, you can roll the cost of renovations right into your mortgage. You can find more information on it here.
How Does It Work?
How the Purchase Plus Improvement Program works:
- Determining Your Purchase Price and Renovation Costs – Suppose you’re buying a home for $400,000 and you want to add a new kitchen or bathroom. During the mortgage application process, you’ll need to get quotes for the renovation work. For example, the quotes may total $40,000.
- Submitting the Application – You’ll submit your mortgage application with the total purchase price of $440,000 (the cost of the home plus renovations). Your down payment and mortgage will be based on this amount.
- Funding and Renovation Process – Once your mortgage funds and you have the keys to your new home, the renovation money stays with the lawyer. Now, you need to get the renovation work done, which can be financed through a line of credit, your savings, or even a flexible contractor willing to wait for payment.
- Completion and Payment – After the renovations are complete, you’ll provide paid receipts or invoices, and an appraiser will inspect the work. The appraiser’s report and your invoices go to the lender, who then authorizes the lawyer to release the renovation funds. You can now pay back any borrowed money or reimburse yourself.
Key Benefits of Rolling Renovations into Your Mortgage
- Single Payment – By including renovation costs in your mortgage, you’ll have a single monthly payment instead of managing multiple loans.
- Higher Property Value – Renovations can increase the value of your home, potentially leading to higher equity.
- Flexibility in Renovation Costs – While typical renovation costs covered are up to $40,000, some lenders can go higher, even up to $100,000.
Important Considerations
The process can be a bit cumbersome, but it’s doable with the right guidance. Make sure you work with a mortgage broker who understands the intricacies of the Purchase Plus Improvements Program.
I’m here to ensure that your path to homeownership is not only successful and seamless, but also rewarding. If you’re looking to get pre-approved for a mortgage to buy a property in Edmonton, fill out my online application. I’m here to help you every step of the way.
About Jason Scott, Edmonton Mortgage Broker
Looking for a personalized mortgage solution? As an Edmonton Mortgage Associate, I’ll be your trusted partner who will help you get the right mortgage for your family home or Investment property. I’m Jason Scott, and I’ll be your Mortgage Broker in Edmonton.
