A purchase plus improvements mortgage lets you buy a home and finance defined renovations in the same mortgage: the lender approves you on the home’s improved value, holds back the renovation portion, and releases it as the work is completed and verified. For Edmonton buyers eyeing solid older homes that need a kitchen, a furnace, or a legal-suite upgrade, it is how renovation money gets borrowed at mortgage rates instead of credit-card or unsecured-loan rates. This is the product for the hidden costs of older homes this product is built for.
How does the holdback and release process work?
Quotes come first — before your financing condition expires, you provide contractor quotes for the planned work, and the lender and insurer approve the improvements as part of the file. At possession, only the purchase portion funds; the improvement funds sit in trust with your lawyer. As work is completed, the lender may release funds in stages after inspections confirm progress, with the final release on full completion. The practical consequence: your contractor must be able to start work before being fully paid, and your quotes become a commitment — casual scope changes after approval are hard to fund.
What kinds of work qualify — and what does not?
Improvements that add lasting value to the property are the core of the program: kitchens, bathrooms, roofing, furnaces, windows, basement development, and suite work done with permits. Purely cosmetic refreshes and movable items are harder to include, and the work generally must be completed within a set window after possession, commonly around 90 to 120 days depending on the lender. In Edmonton’s older neighbourhoods — where Royal LePage pegs the detached median at $529,600 and many listings predate modern systems — the program is often the difference between buying the house you can see and buying the house it can become. A common eligible project is Poly-B replacement as an eligible improvement.
“She got everything done fast and found me a great rate too. Honestly, I felt really taken care of the whole time.” — Vince, Google review
Photo via Wikimedia Commons.
What should you line up before you offer?
A contractor who can quote in writing during your condition period, a realistic contingency on top of the quotes, and cash flow to bridge work that must start before the first release. Tell your broker the renovation is part of the plan before the application goes in — structuring it afterward is where files stall. The First Home Guide for Edmonton covers the surrounding purchase steps, and a Mortgage Renewal Check is the equivalent tool if you already own and are weighing a refinance instead.
Found an Edmonton home that needs work and want the renovation inside the mortgage? Call me at (780) 722-5621 before you write the offer and we will build the quotes into the approval. For an investment property, see rental property mortgages: improving an investment instead. Or start with the Pre-Approval & Refinance Check.
By Travis Bannert, Realtor and Mortgage Broker
Travis Bannert, Mortgage Broker | Next Door Mortgages, BFL Dominion Lending Centres | (780) 722-5621 | nextdoormortgages.com