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Purchase Plus Improvement Mortgage in Canada

new homeowners renovation and painting

Are you considering purchasing a new home in Canada and making improvements to it? If so, you might want to explore the option of a Purchase Plus Improvement Mortgage. This innovative mortgage solution allows homebuyers to not only secure funds for buying a property but also obtain additional financing for renovations and upgrades. In this article, we’ll dive into the details of what a Purchase Plus Improvement Mortgage is, how it works, its benefits, and what you need to know before applying.

Understanding Purchase Plus Improvement Mortgage

What is a Purchase Plus Improvement Mortgage?

A Purchase Plus Improvement Mortgage is a financial product that combines the benefits of a mortgage for purchasing a property with additional funds allocated for renovations or improvements. Essentially, it allows homebuyers to include the costs of desired upgrades into their mortgage, providing a single, convenient source of financing.

How does it differ from a traditional mortgage?

Unlike a traditional mortgage that solely covers the property’s purchase price, a Purchase Plus Improvement Mortgage includes a budget for specific renovations. This means that you don’t need to secure a separate loan or dip into your savings to renovate your new home. The mortgage covers both the initial cost of buying the property and the projected expenses for improvements.

Eligibility criteria

Eligibility for a Purchase Plus Improvement Mortgage depends on factors such as credit score, income, and the nature of the renovations. Lenders typically require a solid credit history and a stable income to ensure your ability to manage the mortgage payments and renovation costs.

Advantages of a Purchase Plus Improvement Mortgage

Financing for renovations

One of the major benefits of this type of mortgage is the ability to finance renovations without exhausting your savings. Whether you’re looking to modernize the kitchen, or upgrade the bathrooms, the mortgage funds can cover these costs.

Increased property value

Renovations often lead to an increase in property value. By investing in improvements, you’re not only enhancing your living space but also potentially boosting the future resale value of your home.

Convenience and cost-effectiveness

Opting for a Purchase Plus Improvement Mortgage streamlines the financing process. Instead of managing multiple loans and payments, you have a single monthly mortgage payment that covers both the property purchase and renovations. This can be more convenient and potentially cost-effective in the long run.

Step-by-step Guide to Obtaining a Purchase Plus Improvement Mortgage

Pre-application preparations

Before applying for the mortgage, assess your budget and determine how much you can comfortably allocate to renovations. Outline your renovation plans and get cost estimates from contractors to present to the lender.  Note for this program the limit is $40,000.

Getting quotes from contractors

Obtain quotes from reputable contractors for the proposed renovations. These quotes will help the lender understand the scope and cost of the improvements you’re planning.

Applying for the mortgage

Submit your mortgage application, including details about the property, your financial situation, and the renovations you wish to undertake. Be prepared to provide documentation to support your application.

Approval process and fund disbursement

The lender will review your application and once approved, the mortgage will fund and the improvement funds will be held in trust by your lawyer until the work is done.  Upon completion an inspection is done to ensure the work is complete and satisfactory.  At that point your lawyer disburses the money to you or your contractors.  Lenders have specific guidelines on how the renovation funds are released.

Things to Consider

Budgeting and planning

Careful budgeting is crucial to ensure that you have enough funds to cover both the property purchase and the renovations. It’s wise to set aside a contingency fund for unexpected costs that may arise during the renovation process.

Choosing reputable contractors

Selecting reliable and experienced contractors is essential for the success of your renovations. Research and gather recommendations to find professionals who can deliver quality work within your budget.

Navigating building permits and regulations

Depending on the nature of the renovations, you might need to obtain building permits and adhere to local regulations. Factor in the time and costs associated with these permits when planning your project.


Can I do the renovations myself? In most cases, the renovations must be completed by professional contractors to ensure quality and compliance with regulations.  In some cases lenders will allow you to do the work depending on the scope.

Can I use the funds for cosmetic upgrades? Yes, the funds can be used for various improvements, including cosmetic upgrades like painting and flooring.


A Purchase Plus Improvement Mortgage offers a flexible and efficient way to purchase a home while financing the renovations you desire. By bundling the costs into a single mortgage, you can achieve your homeownership and renovation goals without the extra burdens mentioned above.

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