Toronto Purchase‑Plus‑Improvements Mortgage

Struggling with the thought of separate financing for your home and renovations? A Purchase-Plus-Improvements Mortgage combines the cost of buying a property and making improvements into one loan, simplifying the process and removing the need for multiple loans or immediate cash for upgrades. It's an easy way to turn a fixer-upper into your ideal home.

Dealing with different financing options? This mortgage offers:

• Single application: Funds both your home and upgrades.
• Combined financing: Loan amount based on the home's value after renovations.

Easier process: No need for separate loans or equity release later.

• We manage the details, letting you concentrate on your renovation plans.

Concerned about costs in your dream area? This mortgage can help you buy in your favorite neighborhood, even if the homes need updates or minor fixes. Lenders will check the property's condition and the renovation plan's viability.

Typically, you can borrow 10% to 20% of the home's purchase price for renovations, influenced by the property's expected value post-renovation, along with your income, credit, and lender's terms.

Not all changes qualify. Allowed improvements include:

• Vital systems: Updates to plumbing, electrical, or HVAC.
• Structural fixes: Replacing roofs, repairing foundations.

Aesthetic enhancements: Kitchen overhauls, new floors, or energy-saving windows.

• Luxury items like pools are generally not covered.

Worried about the process? Here's how it goes:

1. Get pre-approved: Know your spending limits for the home and renovations.
2. Gather estimates: Submit detailed quotes from contractors.
3. Valuation: Lender evaluates the home's future worth.
4. Funding: Released in phases as work progresses.

Renovation costs are included in the mortgage, so no additional savings are required upfront. However, you'll still need a down payment for the home, usually between 5%-20%.

Facing unforeseen expenses? Consider:

• Adding a 10-15% contingency to your budget.
• Using savings or a secured line of credit, like a HELOC, for extras.
• Early discussions with your broker for backup plans.

Expect the process to take 4-8 weeks longer than a typical mortgage due to contractor selection and appraisal. Delays can occur from permit issues or material shortages.

Surprises like mold or bad wiring can happen. Reduce risks by:

• Getting a comprehensive inspection before buying.
• Choosing contractors who provide fixed-price contracts.

Lenders will require licensed, insured contractors. Payments are:

• Made in segments as projects hit targets.
• Through an escrow account for clarity.

The down payment is calculated on the total loan (purchase plus renovations). Mortgage insurance is needed if the down payment is under 20%, but there are options for high-ratio mortgages.

Absolutely! Benefits include:

• Lower initial expenses than buying a ready-to-move-in home.

Customized advice for planning renovations.

• A steady income and good credit are essential for approval.