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By Kristi Sauter

PRO Tips by Kristi Sauter

Tips to Mortgage Your Renovation Project

Jul 19, 2021 | 3:00 AM

Part of what makes a house a home is when you get to start adding your own personal touches to the space. These types of transformations can be as big or as little as your imagination (and your budget) allows. Not a lot of people know that it is possible to purchase that house, in the great neighbourhood, with the dream yard AND get the new kitchen or whatever it is you think might make it suit you. When you are looking at purchasing a house, but you want to do some renovations and would like to add those renovation expenses into your mortgage, this product is called a Purchase Plus Improvements Mortgage.

Here’s how it works.

First you must get a mortgage pre-approval to determine your maximum approval amount. Once you find the home, you must have a general idea of what renovations need to be done and what they will cost. This is important because the purchase price, plus the renovation costs cannot exceed your maximum approval amount.

Once your offer has been accepted, you must provide the accepted offer to your mortgage broker as well as the quotes for the requested work to be done. Once the broker has received these items, they will send them to the lender to approve the costs of the mortgage and the renovations.

As soon as you take possession of your home, you can begin the renovations. The lender will instruct the lawyer to hold the additional renovation funds, until the lender confirms the work has been completed. Once the renovations are completed, notify your broker and they will send out an appraiser to complete an inspection to verify the work is completed as per the quotes that were provided.

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The lender will receive the inspection report from the appraiser and validate that the work has been completed in a good manner and as per the quotes provided. They will instruct the lawyer that they are able to release the funds to you, to pay the contractor.

Purchase Plus Improvement mortgages are a great option, especially if you know where you want to live but you cannot quite find the right house. So, if you have been watching those home improvement shows and you are considering taking on a project, this is a great mortgage option for you.