Renovations and Purchase Plus Improvements

​Purchase Plus Improvements is a program that allows homebuyers to finance both the purchase of a home and the cost of renovations or improvements into one mortgage loan and is offered by most lenders.  

Here's how it works:

1. Initial Purchase: The buyer identifies a property that requires renovations or improvements to meet their needs or preferences. They negotiate the purchase price with the seller.
2. Renovation Costs: In addition to the purchase price, the buyer estimates the cost of renovations or improvements needed to bring the property up to their desired standards. This can include repairs, upgrades, or additions to the property.
3. Mortgage Application: The buyer applies for a Purchase Plus Improvements mortgage and the lender considers the purchase price of the property as well as the estimated cost of renovations when determining the mortgage amount. The buyer needs to provide quotes for the work with their mortgage application which helps the lender determine the maximum mortgage amount they are willing to provide. If approved for the program the funds will sit with the lawyer until the renovations are complete.
4. Completion and Final Inspection: Once the renovations are completed, the lender may conduct a final inspection to ensure that the work has been done according to the agreed-upon plans and meets the necessary standards. After reviewing the report the lender will let the lawyer know they can release the funds to the clients. In some instances the lender will release back only the amount spent once they've reviewed invoices and any extra funds that weren't used would be made as an extra payment on the mortgage. Some lenders will only ask for an inspection upon completion of the work and in that case will release the full amount of funds as long as the work is complete.
5. Ongoing Mortgage Payments: The buyer makes regular mortgage payments to the lender, which include both the principal and interest on the loan amount.

It's important to note that specific requirements and procedures for Purchase Plus Improvements mortgages may vary depending on the lender and the terms of the mortgage agreement. Additionally, buyers should carefully consider their renovation plans and budget to ensure that they can afford the combined cost of the property purchase and improvements.