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Purchase Plus Improvements lets you finance renovations inside the mortgage you’re already taking out — so the dated kitchen stops being a reason to walk away from an otherwise good house. It’s a genuinely useful structure — with one part worth understanding early, because it takes a lot of people by surprise.
Stephen Green, Mortgage BrokerWaterloo Region · serving all of Ontario
Nearly 30 years in Canadian financial services
The goal is renovation money carried at mortgage pricing instead of on a credit card. How you get there depends on whether you’re buying the house or already own it.
The renovation cost is added to the purchase mortgage. The lender appraises the property twice in effect: what it’s worth now, and what it will be worth once the planned work is done. Your mortgage is based on the improved figure.
Your down payment is calculated on that improved value too, which is a detail worth modelling before you write an offer.
This is the route with the formal program behind it, and the one that lets a buyer take on a house that needs work without draining every dollar they have on day one.
Purchase Plus Improvements needs a purchase to attach to. The equivalent here is a refinance that includes the renovation cost, drawing on the equity already in the home.
It is subject to the usual refinance limits and full qualification, stress test included — so it is a different underwriting conversation, even though the outcome looks the same on your statement.
Whether this beats a secured line of credit depends on the size of the project and how quickly you would pay it off. That comparison is further down the page.
It’s the most misunderstood part of these mortgages, and much easier to plan around when you know it’s coming.
The renovation portion isn’t handed to you at closing. It sits with the lender as a holdback. The work gets done, an appraiser goes back to confirm it was actually completed, and only then are the funds released — usually to your lawyer, who then pays it out.
So somebody needs to cover the renovation in the meantime — either you, or a contractor happy to wait for payment until the work has been signed off.
None of this is unusual once you know to expect it. It only causes trouble when it turns up as a surprise.
Work completed → appraiser re-attends and confirms → lender releases the holdback to your lawyer → funds paid out. Timelines and inspection requirements vary by lender and by the size of the project. Your commitment sets a deadline for completion, after which the holdback can be cancelled.
There’s a bit more sequencing here than on an ordinary purchase — quotes come before approval, not after.
Separate the work that makes the house function from the work you would like eventually. Only the first kind belongs in a mortgage.
Before approval, not after. Itemised, from licensed contractors, with a contingency built in. This is the number one cause of delay on these files.
We work out what the improved value supports, what the down payment becomes, and whether this beats the alternatives for your project size.
The appraiser values the property as-is and as-improved. The lender approves against the finished figure, with the renovation amount held back.
You take possession and the work begins, funded by you or carried by the contractor until completion.
The appraiser confirms the work is done, the lender releases the holdback, and the file is finished.
The test is whether it adds lasting value to the property. If you could take it with you when you move, it almost certainly doesn’t qualify.
Four ways to fund a renovation. The right one depends mostly on the size of the project and how fast you would clear the balance.
| Inside the Mortgage | HELOC | Unsecured Loan | Credit Card | |
|---|---|---|---|---|
| Cost to carry | Mortgage pricing — lower than the other three | Above a mortgage, below unsecured | Higher again | Highest by a wide margin |
| Money available when | After the work is verified | Immediately | Immediately | Immediately |
| Can you fund the work up front | No — you cover it, then get reimbursed | Yes | Yes | Yes |
| Quotes required first | Yes, detailed and written | No | No | No |
| Repayment period | Full amortization — often 25 years | Flexible, interest-only minimum | Fixed, usually 3–5 years | Open |
| Total interest on a small job | Can exceed the alternatives if spread over decades | Depends how fast you repay | Contained by the short term | Punishing unless cleared fast |
| Available to a buyer at closing | Yes — this is its whole advantage | Not until you own and have equity | Yes | Yes |
| Where it tends to fit | Substantial work, at purchase, on a house that needs it | Ongoing or staged projects once you own | Mid-size job you’ll clear quickly | Small jobs paid off within the month |
Scroll the table sideways to see every column. General comparison only — features and pricing vary by lender, term and qualification, and change without notice.
Based in Waterloo Region, working throughout southwestern Ontario — and able to help buyers and homeowners anywhere in the province.
It lets you add the cost of approved renovations to the mortgage you’re already taking out on a home, so the purchase and the improvements are financed together. The lender bases the mortgage on what the property will be worth once the work is finished, rather than on its condition the day you buy it.
No, and this is the part that catches people out. The improvement funds are held back by the lender and released only after the work is finished and verified, usually by an appraiser returning to confirm it was completed. You or your contractor have to fund the work first and be reimbursed afterward, so you need access to that money in the meantime.
Purchase Plus Improvements applies to a purchase. If you already own the home, the equivalent route is a refinance that includes the renovation cost, subject to the usual refinance limits and full qualification including the stress test. The mechanics differ but the goal is the same — renovation money carried at mortgage pricing rather than on a credit card.
The limit is set by the lender and, on an insured mortgage, by the default insurer. It’s normally expressed as a share of the improved value of the property with an overall cap, and it’s meant for improvements that add lasting value rather than for furniture or decorating. Your quotes have to support the figure, so the number comes out of the plan rather than being chosen first.
Permanent improvements that add value or extend the life of the home — kitchens, bathrooms, flooring, windows and doors, roofing, siding, furnace and HVAC replacement, electrical and plumbing updates, basement finishing and waterproofing, decks and permanent outdoor work. Appliances, furniture, decorating and anything you could take with you generally do not qualify.
Yes. Detailed written quotes are needed before the mortgage is approved, because the lender is underwriting the finished property. Vague estimates or a number you have guessed at will hold the file up. Get the quotes early — it’s the single biggest cause of delay on these files.
Most lenders want licensed contractors, particularly for anything structural, electrical, plumbing or requiring a permit. Some allow limited owner-completed work but will only advance the cost of materials, not the value of your labour. Confirm this before you plan around it, because policies differ by lender.
Renovation costs carried inside a mortgage are generally cheaper to service than credit-card or unsecured-loan debt, and usually cheaper than a secured line of credit. The trade-off is that the cost is spread over the full amortization, so a small renovation financed over twenty-five years can cost more in total interest than paying it off quickly another way. Which one wins depends on the amount and how fast you would clear it.
The lender releases the approved amount, not the final invoice. Overruns come out of your own pocket. Building a contingency into the plan before the mortgage is set up is far easier than trying to increase the financing partway through the work.
There’s a deadline set out in your commitment, commonly a few months from closing, after which the holdback can be cancelled. That timeline should shape your contractor booking before you sign, not after — trades in Waterloo Region and southwestern Ontario are often booked well in advance.
We’ll work out together whether the renovation belongs in the mortgage, what the improved value supports, and how to cover the gap before the holdback is released.