Mortgage Broker, Red Deer Buyers, First Time Home Buyers, Purchase Properties,

Purchase Plus Improvement, a quick guide for you

Author: Leann Scarlett | | Categories: First Time Home Buyers , HOME BUYING , RE-FINANCING , RENEWING , REVERSE MORTGAGES

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You found the perfect home, great location,  but its missing a garage or the kitchen is less than desirable?
Let's talk about the Purchase + Improvement Mortgage...
Purchase Plus Improvements is a great mortgage option for consumers looking to purchase a home that has great potential, but needs renovation. This program allows you to make improvements immediately after taking possession of your new home and have the costs rolled into one easy-to-manage mortgage. The idea is that immediately renovating your home adds to its market value and the mortgage is essentially based on that new and improved value. It’s a great way to purchase a home AND ensure that the home is up to date and in good repair.


*LTV = The amount of the mortgage loan compared to the value of the property.
Example: (1 - (Down Payment / Property Value)) X 100% = (1 - ($100,000 / $1,000,000)) X 100% = 90%

YOU'VE FOUND A HOME THAT YOU LIKE, and you would like to update the kitchen and upgrade the windows. The total of these upgrades is $30,000.00.

$300,000          +                $30,000 ( 10% of the purchase price to a maximum of $40,000.00)  = $330,000.00
PURCHASE PRICE           Improvement Costs                                                                                New Value

The Down Payment will now be $16,500.00 (5% of the new value, not purchase price)


STEP 1 - Once you find a house that you like, I can get you an approval started based on the purchase price plus the estimated value of improvements. You then go and get firm price quotes for the work that needs to be done.

STEP 2 - It is important you get quotes as quickly as possible as the final approval will not be granted until these are reviewed and received by the lender.  The quotes must be specific with what work will be completed. The work must be of an approved type that adds lasting value to the home.

STEP 3 -The mortgage is advanced for the full amount and you take possession of your new home and start the improvements. The work must be completed according to the lender’s requirements. (Example: Some lenders may set a timeframe for the work to be completed.)

STEP 4 - Once the work is completed an appraiser is sent out to the property to ensure the improvements were completed as required. At this time you will also have to send me the receipts that you have accumulated for the project. 

STEP 5 - . Your lawyer will be instructed by the lender to release the money for the improvements - Wala  - you get the money for the improvements


YOU WILL NOT RECEIVE ANY FUNDS FOR THE RENOVATIONS UNTIL AFTER THE WORK IS COMPLETED. The improvement is funded through your savings, credit card or the trades person doing the work may only require a small deposit until the work is 100% complete. 

Please call Leann Scarlett for more details around this program 403-342-2471 






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