Purchasing a home is more than just a milestone; it's an opportunity to create the living space you've always dreamed of. However, not every home comes in perfect condition, and sometimes renovations are necessary to bring your vision to life. This is where a "Purchase Plus Improvements" mortgage comes into play—a financing option designed to help you secure additional funds for those much-needed upgrades. Surprisingly, 38% of Canadians are unaware of this valuable mortgage solution. Let’s explore how this option works, its benefits, and the leading lenders offering this service.

What is a "Purchase Plus Improvements" Mortgage?

A "Purchase Plus Improvements" mortgage empowers homeowners and buyers to borrow beyond the purchase price to cover renovation costs. Whether you’re eyeing your first home, renewing your mortgage, or seeking an affordable fixer-upper, this financing option is ideal for those who want to personalize their space but lack the upfront capital for renovations. However, a solid down payment is crucial to improve your chances of approval.

How It Works

Step 1: Pre-Approval with a Renovation Budget

Start by getting pre-approved for a mortgage by a Mortgage Broker, including an estimate of the additional funds required for renovations. Having a clear idea of the projects and associated costs will streamline this process.

Step 2: Purchase Your Home

Once you’ve found your ideal property, proceed with the purchase. The mortgage is then funded based on the total amount (purchase price plus estimated renovation costs), which may be released in installments as the work progresses.

Step 3: Submit Renovation Plans

To access additional funds, submit detailed renovation plans and quotes from licensed contractors to your lender. This documentation is crucial for validating your pre-approval. Prioritizing home energy efficiency upgrades can add immediate value, reducing your home’s operating costs. The savings from these upgrades can be used to make extra mortgage payments, helping you pay off the renovation costs faster while enhancing your home's comfort and efficiency.

Step 4: Complete the Renovations

Renovation funds are typically released in stages, often requiring inspections to ensure that the work is completed as planned. Once everything is finished, you’ll enjoy the comfort of an improved home with the convenience of a single monthly payment.

The Benefits of a Purchase Plus Improvements Mortgage

Increase Your Home’s Value

Renovations can greatly boost your home’s value, especially when focused on energy efficiency. High-impact upgrades like heat pumps, EV charging stations, and battery systems not only save you money but also make your home more appealing to millennial buyers, enhancing its market value and attractiveness if you decide to sell.

Simplify Your Finances

By combining the purchase price and renovation costs into a single mortgage, you simplify your financial obligations. Additionally, mortgage rates are often more favorable compared to personal loans or credit cards.

Immediate Customization

With this mortgage, you can start personalizing your new home from day one. Many lenders offer flexible terms, allowing you to tailor your financing to meet your unique needs.

Leading Canadian Lenders Offering Purchase Plus Improvements Mortgages

Canada Mortgage and Housing Corporation (CMHC)

The CMHC Improvement Program allows buyers to finance up to 95% of the improved value of their home, with widespread support from various lenders.

Sagen

As one of Canada’s largest private mortgage insurance providers, Sagen offers a comprehensive Purchase Plus Improvements Program, making it easier to finance your renovation dreams.

Steps to Secure a Purchase Plus Improvements Mortgage

1. Assess Your Needs: Determine the scope of the renovations and obtain detailed estimates from contractors.
2. Seek Pre-Approval: Include the estimated renovation costs in your mortgage application.
3. Submit Documentation: Provide your lender with renovation plans, cost estimates, and other necessary documentation.
4. Complete the Purchase: Finalize the home purchase and begin renovations according to the agreed-upon plans.
5. Monitor Progress: Work closely with your lender to ensure funds are released in stages as renovations progress.

Maximize Your Home Improvements

Enhancing your home is about making the right improvements that boost comfort and value. Paddio can help you achieve this by facilitating energy efficiency upgrades, giving you access to Canada’s $40,000, 0% interest, 10-year loan, along with other government grants and incentives.

Start with Paddio’s free home energy efficiency estimate to identify immediate savings opportunities. The money you save can be reinvested into further home improvements or used to pay down debt, maximizing the value of your investment.

Make smart, impactful upgrades with Paddio, and transform your home and finances.
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A Purchase Plus Improvements mortgage is an excellent option for Canadian homebuyers looking to enhance their new home right from the start. By understanding your options and collaborating with trusted lenders, you can turn your new house into a dream home while enjoying the financial benefits of a single, streamlined mortgage payment.

For those considering this option, consulting with mortgage professionals and financial advisors is highly recommended. With careful planning, a Purchase Plus Improvements mortgage can be a strategic and financially sound choice to future-proof your home. 

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