Purchase Plus Improvement

The Perfect Home! (But it Needs some improvements…)

 repair roof

Have you ever been house hunting and you know your price range, area, etc. and now you find a home you love that’s in the upper end of your price limit, but it needs a new roof!? You could purchase this house financially, but you won’t have the cash for the new roof…

If so, Here is the Canada Mortgage & Housing Corp. (CMHC)’s Purchase Plus Improvement Program. This program, administered by CMHC, but funded by mortgage lenders, will allow you to finance the purchase of your home plus the cost of future renovations, all in your original mortgage! These required renovations would be financed at the mortgage rate of interest, which is lower than a loan’s rate of interest. You would then spread the repayment of these renovations over the same amortization term (25 years) of your mortgage! This results in an almost negligible change in your mortgage payment. There is no change in the interest rate and there is no change in the CMHC Insurance Premium rate and only a minimal increase in down payment.

Here’s how it works:

  • You put in an offer to purchase showing for example 5% down payment.
  • During the financing condition period, you obtain a few bona fide written estimates for the work required (as per example: a new roof estimates it to be $5000)
  • This cost is then added to the purchase price
  • You would need to increase your 5% down payment by $250.
  • The mortgage would be for 95% of the original purchase price PLUS the cost of the new roof.

Even though this program is available through CMHC, not all banks or mortgage companies will participate in this program. A mortgage broker will have the information you require and can arrange for a preapproval under this program. This will leave only the house to be qualified during the financing condition period.

This program is even available to people who are already in a home that needs some renovations, but is available on case-by-case basis.

For more information,  who can give you guideance, and help inform you of the options you have so that you can make the right decision for your situation.