Have you found the perfect home, but it needs updates and improvements? No need to worry! The Purchase Plus Improvements (PPI) Mortgage can transform that fixer-upper into your dream home without breaking the bank.

What is the Purchase Plus Improvements Mortgage?

The PPI Mortgage is an excellent option for qualified homebuyers looking to make improvements to their new property.

For insured purchases priced up to $999,999, with less than a 20% down payment contribution, it allows you to borrow up to 20% of the post-renovation value of the home or up to $40,000 with as little as a 5% down payment.

For purchases over $1,000,000, you may be able to borrow up to 20% of the ‘as-is’ purchase price value for renovations. The ‘as-improved’ value (post renovations) is used to determine the maximum loan amount, subject to loan-to-value (LTV) limitations (Max 80% LTV).

This program is designed for qualified homebuyers who want to make simple upgrades such as paint, flooring, new windows, finishing the basement, roofing, kitchen cabinets/counters, bathroom fixtures, or adding a detached garage, within 120 days of taking possession. It’s perfect for transforming a house into a charming and inviting home.

i.e. Based on a $25,000 (5%) down payment contribution (Insured, High ratio)
  • Purchase Price: $465,000
  • Cost of Renovations: $35,000
  • Revised Property Value: $500,000
  • Mortgage Loan Amount: $475,000 (Plus mortgage default insurance premium of $19,000) = $494,000
In this example, the minimum down payment contribution required is 5% of the purchase price, including the renovations, amounting to $25,000. For purchases with less than 20% down, mortgage insurance is required, resulting in a mortgage default insurance premium.

Why Choose the Purchase Plus Improvements Mortgage?

With the PPI Mortgage, you can increase your property value immediately and get funds for much needed renovations at a favourable interest rate. It’s a great way to invest in a fixer-upper without resorting to alternative financing solutions or having to come up with your own funds.

Here’s how it works

1. Get Pre-Approved:

  • Get in touch to start the pre-approval process with me and determine your maximum approved loan amount, providing peace of mind as you search for the right property.

2. Find a Home & Plan Your Renovations:

  • Thoroughly evaluate the essential renovations, whether you’re taking on the work yourself or enlisting the expertise of a professional contractor.
  • Obtain official detailed quotes for planned renovations to determine the new home value and your down payment requirement based on the improvements.
  • Ensure total expenses stay within your maximum approval amount.
  • Submit an offer to purchase (including Financing and Home Inspection Conditions is recommended).

Note: If you have an accepted offer, you may need to request an extension on your Financing Condition in order for this work to be done.

3. Secure Approval with Renovation Costs:

  • After your offer is accepted, provide me with your signed Agreement of Purchase and Sale along with official detailed renovation quotes (required to submit your mortgage application to the lender).
  • I will work with the chosen lender to obtain your mortgage approval, including renovation costs.
  • An appraisal confirming the as-is property value may be required.
  • The mortgage is funded based on the contractual price.
  • The lender will release the full funds to the lawyer, who will hold the portion of improvement costs until renovations are completed.

Note: Typically, you will need to cover a portion of the renovation costs upfront (out of pocket) until the lender approves the completed renovations. The value of the improvements will not be released until all renovations are completed.

4. Commence Renovations:

  • Close the deal, take possession of your home, and start the renovations.
  • Renovations can be done by yourself or a company/contractor, but heavy labor costs are not reimbursed. If you do the work yourself, only material costs are released.
  • Renovations must be completed within 90-120 days from the closing date, depending on the chosen lender, and should not deviate from the original renovations quote; otherwise, the lender could decline to release the funds.

5. Funds Released:

  • Notify me as soon as the renovations are done.
  • An inspection report from an appraiser may be required to confirm the completion and quality of the work.
  • Once approved, the lender will release the remaining funds to you to pay for the completed renovations.
  • If the final costs are less than the initial estimate, the leftover money is applied back against the mortgage.

Unleash Your Dream Home Potential Today!

The Purchase Plus Improvements Mortgage empowers you to create the perfect space that reflects your style and preferences. Get in touch to explore the best financing option for you!

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