Purchase Plus Improvement Mortgage | How to Get Money From The bank to renovate a property?

What is The Purchase Plus Improvements Mortgage?

It is a mortgage program that allows you to borrow the cost of a renovation with your mortgage. You can add the renovation cost to your mortgage amount with proof the renovation was complete. Normally this will come in draws as you need money, and the bank will allow you a maximum you can borrow.

How much can you borrow with purchase plus improvements?

You can borrow as much as $100k extra over and above your mortgage amount for the renovation!

When can I use the purchase plus improvements program?

This can only be done while you are purchasing the subject property.

How does the purchase plus improvements mortgage work?

You will describe the renovation to the mortgage broker (me) and get quotes for the completion including all materials. The bank will then approve the renovation in the purchase plus mortgage program. You will then take possession of the home and start the renovation. The renovation can be completed in stages, that are then called “draws” for the bank. The bank would have already sent the money for the renovations to your lawyer, whom you will submit receipt to in stages of completion. An inspector may go out to check the work. You will then be paid by the lawyer for the work that has been complete after providing the invoice.

Example of purchase plus improvements.

You purchase a home for $300k

Improvement cost for developing a basement is $100k

Total mortgage amount is $400k

You must provide quotes prior to being approved.

Approved

You then take possession and start development. You complete plumbing rough In, electrical rough in, framing and drywall. You are running out of money, so you submit your receipts to the lawyer and he asks for pictures to send to the bank. The bank approves the draw and the lawyer releases funds up to that point,.

You continue the renovation and request draws as needed until complete.

Once the renovation is complete, your mortgage amount will be adjust to reflect the exact amount you spent plus original mortgage amount.