Purchase Plus 
Improvement Mortgages

What are they?
How do they work?

A Purchase-Plus  Improvement 
Mortgage takes into account 
the future value of a home with repairs or renovations as completed after the closing.

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Example: Your realtor introduces you to a property that requires basement finishing or upgrading. 

The estimated cost of the basement renovations is approx. $40,000. The current appraisal value and sale price of the home is $400,000. Instead of the standard 5% down on the $400,000 ($20,000), a Purchase-Plus Improvements Mortgage lets you place 5% down on the future value of the home ($440,000) which includes the cost of the basement renovations.
Cost of Home:

$ 400,000
Standard Down Payment (5%)

$   20,000
Projected Cost of Renovations:

$   40,000
Approved Future Value:

$ 440,000
Total Down Payment (5%):

$   22,000
To pre-qualify for a Purchase-Plus Improvements Mortgage call 416-367-8370 or go to 
https://www.werenovate.com/form22.htm
Main Benefits of a Purchase-Plus
Improvements Mortgage:
1-

You won't have to qualify for a further renovation loan after closing (which is often hard to do)
2-

You pay the lowest possible interest rate and payments for the renovations (which have been included in the mortgage with same rate and amortization)

Refinance-Plus
Improvement Mortgages

How they differ from
Purchase-Plus
Improvement Mortgages...

The main difference between a Purchase-Plus and Refinance-Plus Improvement Mortgage is the maximum LTV (Loan-to-Value) allowable for refinancing vs. the maximum LTV for a new purchase.

Both mortgage products use the future value of the home based on the renovations being completed.

Recently, major banks have made it harder for many homeowners to refinance their existing mortgages by lowering the maximum allowable Loan-to-Value (LTV) to 85%.

In simple terms, if your home is worth $200,000 and your mortgage balance is $160,000 (80% LTV), you will only be able to refinance it to a maximum of $170,000 (85% LTV).

If the cost of proposed repairs or renovations is $25,000, conventional refinancing will not provide enough funds for the work.

A Refinance-Plus Improvement Mortgage enables the bank to use the future value of the home with the renovations in as the basis for a refinanced mortgage.

Using the example above:

"As is" value of home:

$200,000.00
Cost of proposed Renovations:

$25,000.00
Future value of home with renovations in:

$225,000.00
New Mortgage Refinance @ 85% of Future Value:

$191,250.00

Pay off the existing mortgage:

$160,000.00

Maximum funds available for Renovations:

$31,250.00
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