Finding the right property that meets both your functional needs and your budget is not always an easy task. You may find a house with the ideal layout in your dream neighbourhood, but the interior needs some major upgrades. Or maybe you’d like to update the kitchen and bathrooms as soon as you move in. This is where a purchase plus improvement mortgage comes in.
In this article, I’ll share about this mortgage program and whether or not it’s the right choice for you!
A purchase plus improvement mortgage (PPI) allows you to add renovation funds to your mortgage amount. With a PPI mortgage, you will be able to buy a home, renovate it to your liking and pay for it through your one mortgage payment.
Improvements will need to be permanent in nature, including paint, cupboards, flooring, roofing, furnace, etc. Appliances and other non-permanent fixtures are not covered through a purchase plus improvement mortgage.
The general rule of thumb is up to $40k in improvements, but some lenders will allow more, up to 20% of the property value on exception. To see what you quality for, please reach out to me!
There are different options available for a purchase plus improvement mortgage. In Canada, there are 3 main providers of this mortgage option:
CMHC Improvement – This is for people who are purchasing an existing house as well as those looking to build a new home.
Canada Guaranty Purchase Advantage Plus – This is for people who are purchasing a home and wanting to add value through renovation.
Sagen Purchase Plus Improvements Program – This is for people who wish to purchase a home while adding value immediately through improvements.
Each option is dependent on how much money you’re putting towards your down payment and what you’re looking to achieve. Since each option is different and is based on your unique needs, please contact me and we can get your max amounts and numbers specific to your ideal home purchase. I’ll be able to let you know what you’d be approved for for renovations based on the home purchase price.
Lenders will typically require a quote from a contractor for improvements. They will also need the actual improvements to stay true to what’s contained in the quote. Some lenders will allow for DIY improvements and some will require a professional contractor to complete the work.
If you’re considering doing the improvements yourself, this is a very important piece of information that I will need to know!
The selected lender will advance what’s needed for the initial purchase at funding. A final advance of funds will be released within 120-150 days once all of the improvements are 100% complete as reimbursement.
The lender will then send an appraiser to confirm the quoted improvements are complete unless the improvements total $10,000 or lower. In this case, they could ask for paid invoices instead. This will depend on the lender.
Give me a call today and we can go over what a purchase plus improvements mortgage is in greater detail. We can chat through your plans and see if this is the best mortgage option for you. Give me a call at 250-826-3111, apply on my website or contact me through my online contact form to start the conversation today.
Let’s get your application off the ground.
