This Weeks Rates:
Insured:
- 5-year fixed: Starting at 3.94%
- Variable: Starting at 3.54%
Insurable:
- 5-year fixed: Starting at 3.94%
- Variable: Starting at 3.69%
Conventional:
- 5-year fixed: Starting at 4.19%
- Variable: Starting at 3.95%
CMB:
- 5-Year: 3.0%
- 10-Year: 3.6%
In this episode of the Close More Deals Podcast, host Scott Dillingham dives into the powerful world of purchase plus improvements mortgages, a game-changing tool for real estate pros and homebuyers looking to finance renovations alongside their property purchase. Often overlooked, this program lets you roll renovation costs directly into your mortgage, turning fixer-uppers into dream homes without separate loans. Scott explains how it works for purchases and refinances, highlighting how lenders appraise the property based on its post-renovation value to maximize borrowing power and make distressed properties financeable. Whether it's updating kitchens, bathrooms, or addressing major repairs, this approach helps clients avoid emotional buying pitfalls by focusing on long-term value and livability.
Scott breaks down the funding options, from lump-sum payouts to progress draws where funds release after one-third, two-thirds, and full completion of work—ensuring accountability while minimizing risk. He notes key lender variations, like caps at $40,000 for some versus unlimited amounts tied to appraisals for others, urging brokers to shop wisely for the best fit. This strategy shines for first-time buyers eyeing affordable homes needing TLC, investors targeting rentals, and sellers prepping properties for quicker sales. Even refinance plus improvements can unlock equity for essential fixes, valuing the home as-improved to bridge gaps in current equity.
With rising interest in home renovation financing in Canada, Scott emphasizes its versatility across residential, select rental, and rare commercial scenarios. By blending practical tips with real-world examples—like transforming ugly properties into lender-approved gems—this episode equips mortgage professionals to close more deals efficiently. Discover how purchase plus improvements mortgages expand buying options, reduce out-of-pocket costs, and build wealth through smarter property upgrades.
Key Takeaways
- Purchase Plus Improvements Basics: Roll renovation costs into your mortgage for buying fixer-uppers, with lenders funding based on post-improvement appraisals to finance even distressed properties.
- Funding Flexibility: Choose lump-sum advances or progress draws (payouts at 1/3, 2/3, and 100% completion) to ensure work progresses, making it ideal for kitchens, bathrooms, paint, or major repairs.
- Lender Variations to Watch: Many cap funds at $40,000, but others offer unlimited amounts if the renovated value appraises—shop insured options for 5% down payments and higher loan-to-value ratios.
- Refinance Plus Improvements Power: Unlock equity for pre-sale fixes by valuing the home as-improved, helping sellers boost marketability and close deals faster without upfront cash.
- Versatile Applications: Works for residential purchases, select rentals (despite common lender hesitancy), and rarely commercial—perfect for first-time buyers, investors, and wealth-building strategies.
- Pro Tips for Success: Get detailed quotes upfront, guide clients on realistic scopes, and use this tool to turn "ugly" homes into livable assets, emphasizing informed decisions over impulse buys.
Links to Show References
- LendCity Mortgages (for Pre-Approvals and Renovation Financing): lendcity.ca
- (00:00) - Intro to Purchase Plus Improvements Mortgage
- (01:30) - Why It's an Underrated Renovation Financing Tool
- (02:00) - How Purchase Plus Improvements Works for Homebuyers
- (02:45) - Funding Options: Lump Sum vs. Progress Draws
- (03:00) - Refinance Plus Improvements for Sellers and Equity Boosts
- (03:25) - Applicability to Rentals, Commercial, and Pro Tips
Show Resources:
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