PURCHASE PLUS IMPROVEMENTS MORTGAGES
Found the perfect house, but it needs some love?
If you’ve been shopping the market for your dream home but can’t seem to find that Pinterest-perfect place, a Purchase Plus Improvements (PPI) mortgage could be just the product for you.
That dream kitchen, an awesome entertainer’s basement, or a spa-like bathroom upgrade – these renovations and more can qualify for the PPI mortgage program – read on or talk to one of the top mortgage professionals on our team to learn more about applying for this style of mortgage.
What is a PPI Mortgage?
And how can it benefit your home purchase…
Let’s face it, finding the perfect home is highly unlikely if you’re shopping the resale market in Toronto or any other Canadian market… (building your dream home – now that’s a different story!) Considering a PPI mortgage will allow you to keep an open mind when you’re looking at homes, as you’ll have an allotted amount approved, beyond the purchase price, to complete renovations after you take possession. Talk to our licensed mortgage brokers about how you can take advantage of a lower interest rate and one monthly payment, and how a PPI mortgage could be the least expensive way to complete renovations.
You’ll want to work with an expert mortgage agent for this type of loan, as they are more complex mortgages than a standard purchase – lucky for you we’ve got a team of the best Toronto mortgage loan brokers to support you in your PPI mortgage journey.
Here’s what to expect in your PPI Application
- Most importantly – Purchase Plus Improvement mortgages are a reimbursement program – this means you’ll need a way to pay the contractors before you are reimbursed by the lawyers (who hold the PPI funds in their trust account). For larger projects over $40,000 or 20 per cent of the purchase price, you may be able to receive payment instalments to cover project costs.
- PPI mortgage requests have to be completed at the time of application; you cannot add this feature onto your mortgage after an approval has been completed.
- PPI mortgages must be insured by the Canada Mortgage and Housing Corporation (CMHC).
- After the offer to purchase is made on the home you choose, you will have to acquire at least three quotes from contractors to determine the cost of the renovations you plan to complete. These need to be provided to your mortgage advisor to obtain a final mortgage approval.
- Once the quotes are reviewed, an appraiser will assess the value of the house before improvements (as-is) and what the value would be after improvements (as-improved). The PPI program can loan a total mortgage up to 95% of the lesser of the following amounts:
- the as-improved value, or
- the as-is value plus the cost of improvements
- Typically, renovations must be completed within 90 days after move in. It’s a fast way to turn your new purchase into your dream home, but it does carry upfront costs.
Now, it’s time to connect with our team of top mortgage brokers so that you can learn more rolling your renovations into your mortgage, at the best mortgage rate, so that you can get back to scrolling REALTOR.ca for the perfect Pinterest-worthy project property.
Need a connection to the best Toronto-area contractors that can be trusted to get the job done right, the first time? We’d love to refer you to one of our dependable home renovation professionals.