Back to Blog
14 Feb



Posted by: Cory Lewis

Current mortgage rules dictate that home owners can purchase a property with as little as 5% down. Did you know that on top of this, they can also access additional funds for renovation costs at the time of purchase?

Once you own a home it can only be refinanced up to 80% of the market value in the future. This means that most likely first time home owners with 5% down payments will not be able to access low interest mortgage funds for many years after taking possession of their properties. Home values would have to increase  / or balances paid down significantly before refinancing to complete renovations or upgrades on the property will be possible.

Knowing this, as a buyer if you are considering an older property that may need some renovations in the next 5 years  – I strongly recommend considering the purchase plus improvements program. Not only will you build equity right away, customize the home to suit your needs and tastes but  you also have the option to roll it into your lower interest mortgage rate at an affordable amortized payment.  

How does it work?

At the time of purchase you will be required to provide quotes to the lender for the work that you plan on doing. The bank and insurer have to agree that the renovations you are completing will increase the value of the property by what you are paying.  The minimum 5% down payment will be based on the total of the purchase price and the renovation costs. Some examples of common improvements we see approved are kitchen & bathroom renos, basement development, new windows, new flooring, new roof or the addition of a garage to a property.

Once approved and you move in to the home, the funds for the renovation costs are held in trust at the lawyers office until the work is done. As soon as the renovations are complete, the receipts are brought to your lawyers and/or the bank may send an inspector out to confirm, and then the funds will be released to you or your contractor.

Break it down for me!

You have found a home with a purchase price of $400,000 that needs to have the following improvements to make it just perfect:  New Kitchen ($20,000), flooring ($5,000).  How much down payment do you need and what is the monthly payment based on today’s rates (5 year term at 3.49%)?

Purchase Price $400,000
Upgrades $25,000
Total Purchase Price $425,000
Down Payment $21,250
Monthly Payment $2,094.22



I can help you to finance the purchase of your home and also the upgrades needed to make your new home perfect!