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Purchase Plus Improvements Mortgage


Purchase Plus Improvements, also known just as Improvements Mortgage gives you the ability to borrow 10% extra for renovations.  Here's how it works...


Looking to purchase a home, but it needs a little TLC?  Maybe it's a fixer upper?  There is a little known program which CMHC and Genworth both have which allows to to borrow up to an additional 10% of the as improved amount for renovations.  For example, if the purchase price is $250,000 and with your renovations the as improved value would increase to $275,000, you would be able to borrow 10% of that, or $27,500 in addition to the mortgage.  There are a few catches which we'll discuss below.


In order to qualify for the Purchase Plus Improvements mortgage, you will need to put a condition on your offer that the property be inspected by a qualified professional contractor, who is going to issue you a quote for the work.  This quote must be provided as part of the approval process with your mortgage broker.  Once the lender and CMHC or Genworth agree on values and improvements, the additional monies will be forwarded to the lawyer who will hold them until the renovations are completed.


Because the money will be held by the lawyer until the work is completed, we suggest our clients have an unsecured line of credit available, or are able to borrow from family temporarily.  Upon completion of the work, an appraisal is ordered to confirm the work has been completed, and the value has been increased.  If all goes according to plan, the lender will then advise the lawyer to release funds to the client to reimburse what the clients paid up front for the work.  This amount is then added to the mortgage, and your payments will be based on the full amount borrowed.


In our experience, appliances, furnaces, or adding a basement suite are examples of improvements that will not be covered under the program.  We have seen new windows, flooring, or even changing from a boiler to forced air be approved.


The Purchase Plus Improvements, or Improvements Mortgage give you the flexibility to purchase a home in a hot market that may be overlooked, due to needing some upgrades.


Genworth's Purchase Plus Improvements Feature Sheet

CMHC's Improvements Mortgage Feature Sheet

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Copyright 2015 - Chris Friesen

Winnipeg, Manitoba