Dan Welyk Realtor®  Since 1999

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How to Roll Renovation Costs into Your Mortgage

When searching for a home to purchase, you may come across a property you fall in love with but it requires some immediate remedies like:older bathroom

  • Updating Mechanical (Furnace/Hot Water)
  • Roofing
  • Windows/Doors

You get the point right? What can you do?


Purchase Plus Improvments Mortgage

What exactly is this?

Simply put, you have the ability to borrow up to 10% of the purchase value of the property from your lender to have some of these items updated in your home so it rolls into your mortgage as long as the renovations increase the value of the property. Depending on the lender, typcally the maximum you can borrow is up to $40,000 but there are lenders who will do more.

How does this work? 

For starters, you need to qualify for the full value of the mortgage including the additional renovation.

Contractor Quotescontractor quotes

Once you have found a home that requires these renovations, you will need to find and receive written quotes from contractors to complete the work which you will need to provide your lender.

Your Realtor® and Financing Conditions

It is very important the seller understands you are using the purchase plus improvements program so your Realtor® can coordinate contractors to view the home. Blindsiding sellers with extra time for contractors coming to see the home is not wise. You will also most likely going to need a little extra time for conditions to allow for these quotes to be completed.

Take Possession of Your New Digs

Once you have taken possession, the funds for your renovations will be held in trust with your lawyer. You then can begin work and have 90 days to have the work complete. This can be extended depending on the lender and circumstances.

Who Pays?

You as the buyer pays for the up front cost of the renovations unless you have a contractor willing to give you terms for the work completed knowing the Purchase Plus Improvements program. If you do not have the cash on hand to get the work completed, you might be able to get a personal loan or line of credit depending on the lender.new bath

Renovation is Complete - Now What?

Now you advise the lender all the work is complete, they will send out a property appraiser to confirm work has been finished. They then advise your lawyer to release the additional funds which then is either paid to you, the contractors or your line of credit.


Increased Value

Now the home you just purchased has instant increased value and will be more in line to what you were initially searching for. 


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