How to purchase + do improvements?

Did you know that with certain lenders you can buy your next property and build some of the renovation cost into the mortgage? You can, and certain lenders partake in this program which is called Purchase + Improvements! 

You buy your next house, say for $600,000. The lender will “reimburse” you up to 10% of the purchase price (in this case $60,000) for renovations “completed” on the property. I mention reimburse and completed as you have to pay and do the renovation first in order to get reimbursed. Once completed the mortgage for $600,000 is now $660,000, so this means you must qualify for your total end mortgage including the extra 10%. 

The funds can be used for many different parts of a renovation. I’ve had clients build garages, flooring, electrical, kitchens, bathrooms, finish basements, build wet bars, complete a suite… However the funds cannot be used towards anything like appliances or furnishings. So if doing a kitchen of any sort, plan to pay out of pocket for the appliances. 

The lender will also have a timeline that you must complete the renovation by in order to complete the program. So it is not something you can plan to renovate in 6-12 months. As soon as you get possession of the property, you hit the ground running! You often only have around 90 days to complete your renovation and when complete, you contact your mortgage broker / lender and they will send out an inspector to verify the work is complete for the finishes your claiming. After that the refund is processed and mortgage adjustment made. Some lenders may give some flex on the 90 days. However it appears most want it done within a fairly short period of time. So you are best to try to plan out, measure, and order everything as soon as possible. I’ve had many buyers use the many hours during their property inspection, to meet with different trades and companies to quote, measure, plan. 

Though the deadline is for sure stressful, a positive to this deadline is you get your update sooner and it is really a great tool to get the renovations and improvements your after. House is perfect but doesn't have the garage and you have room on your credit to fund it prior. Why not build the garage the way you want it to be built and have it included in the mortgage like it was already there!