What is a purchase plus improvements mortgage?

Have you found the home of your dreams, but it needs a little work, and you don’t quite have the budget for these renovations?

Fortunately, there is a solution that will allow you to purchase this home, while also covering the costs of renovations. It is called, “A purchase plus improvements mortgage”.

A purchase plus improvements mortgage permits you to add the cost of renovations within the purchase price of the property. This mortgage is available for existing homes, and for new construction projects as well. One of the main benefits of a purchase plus improvement mortgage is that you can buy a house that is more affordable, and then add to its value almost instantaneously by doing some specific renovations.

The improvements have to be permanent in nature, and add value to the home, such as a kitchen or bathroom remodel, a roof replacement, or a basement renovation. Because your improvements have to be permanent, you cannot get appliances or other non-permanent fixtures covered by a purchase plus improvements mortgage.

The process for obtaining a mortgage plus improvements typically involves the borrower providing detailed documentation about the renovations they plan to make, such as cost estimates and a scope of work. The lender will then approve the mortgage amount, including the cost of the renovations, based on the post-renovation value of the property.

As the renovations are completed, the lender will release the funds to pay the contractors or suppliers. The borrower will typically make mortgage payments based on the full amount of the mortgage, including the cost of the renovations.

It is important to note that not all lenders offer mortgages plus improvements, and the eligibility requirements and terms can vary between lenders.

Borrowers should compare mortgage options from multiple lenders by consulting with a mortgage broker who can find the best mortgage product for your needs.

In summary, 

• Work with a mortgage broker 
• Choose the right lender 
• Work with a reputable contractor 
• Create a budget 
• Apply for the right amount 
• Follow the lender's process 

A purchase plus improvements mortgage is a great way to pay for a property that you want to renovate. You get money to purchase the property like a conventional mortgage, and you also get some extra money to cover the cost of renovations. The big upside of a purchase plus improvements mortgage is that the cost of renovations is included in the mortgage, meaning that you just have to make mortgage payments. There are no other loans payments to make. While there are some requirements and restrictions, a purchase plus improvements mortgage is fairly flexible and lets you cover the cost of renovations with little headache.

If this is your plan, and you are not sure where to start, call or email us, and it will our pleasure to walk you through the steps in order that you can make your home just right, and increase its value at the same time. 

Fred and Martin