Purchase Plus Improvements Mortgage

Considering buying a home that could use an update? A purchase plus improvements mortgage might be the right choice for you.

The purchase plus improvements mortgage is a customizable mortgage that will allow you to make home improvements as soon as you move into your new home by rolling the renovation cost into your mortgage. Improvements such as replacing the floors, updating a bathroom or replacing old wiring are some of the many ways to enhance the value of your new home.


Even though there are some limits on what you can do, a purchase-plus-improvements mortgage is the most affordable way to finance a renovation. This is because of today’s low mortgage rates. A mortgage is the cheapest way to borrow. If you put an additional $40,000 on your mortgage, it will cost you far less than if you borrow $40,000 on a line of credit for renovations down the road.


There are 90 to 180 day timeline on these mortgages, meaning you and your contractor must be prepared to finish any renovations promptly. The timeline is part of what makes this mortgage so great – you improve the value of your home and you get to live in it right away. The exact timeline will depend on your lender and your mortgage broker can help you navigate your options.

How It Works

The first thing you will do is work with your mortgage broker to be pre-approved for your maximum amount.

Then the fun part – find a home you love! Once you have found a home and your purchase offer is accepted, you will get estimates for the improvements you want to make. Your broker can then pass along the estimates to your lender for approval.

If your lender agrees that the renovations will improve the value of your home, they will send your broker an approval for the revised amount of your mortgage – the purchase price PLUS the cost of renovations.

On your closing date, the amount approved for your renovation will go to your lawyer, to be held until you’ve completed the proposed renovations. You will receive the funds once your renovation is complete. This means you must pay the renovation costs up-front from your pocket. Some choose to use a credit card or line of credit to get through the renovation period.

An appraisal will confirm that your renovations were completed within the agreed upon amount of time and then your lawyer can release the funds to you.

It’s important to note that your minimum down payment will be calculated based on the total amount of your home’s assessed value – the purchase price plus the price of the approved renovations.

Purchase-plus-improvements mortgages are the most affordable way to finance home improvements! Contact me today for more information – or if you have any other real estate question! I’d love to help!

About the Author Rom Houtstra

Rom Houtstra is a licensed and experienced Kelowna Real Estate Agent for almost 18 years with Century 21, the largest Real Estate Company in the world with over 8000 offices in 44 countries. He is committed to providing top service when it comes to buying or selling Residential & Commercial real estate, businesses and leases. Ask him about his comprehensive Marketing Plan and Listing Presentation. If you are looking for properties in Kelowna, West Kelowna, Vernon, or in other areas of the Okanagan Valley contact Rom.

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