Purchase Plus Improvements (definition as we see it): When a client is purchasing a home and wants to add cosmetic changes through a renovation process using funds advanced by (the lender) to complete and pay for the renovations.
How it Works: The client finds their dream home and enters a contract to purchase this home, but decides that part of the home (maybe the carpets or kitchen cabinets) need to be updated. Once the purchase contract is in place, the client needs to obtain quote(s) on the work to be completed. The quote(s) should be obtained from a reputable contractor or well known company and should be written professionally on letterhead including labor and material costs in an itemized fashion making review simpler. We are lenders and not contractors or material specialists, so the clearer and easier to read the quote(s), the faster we can respond and approve them. Once the quote(s) submitted are reviewed and approved we convert the purchase file to a purchase plus improvements file by adding specific conditions to mitigate the unique risks involved in this type of application. The mortgage must be insured and we are required to update the insurer with the new numbers along with renovation information and need to adjust mortgage amounts and required down payment for accuracy. Once we have the file approved and all broker conditions met, we advance the entire mortgage amount to the lawyers and condition for a holdback equivalent to the renovation cost.