Creating your dream home

Tracy Head • November 4, 2023

Having troubles finding your dream home? Are the houses in your price range looking a little dated? If you find a home in your preferred neighbourhood that has the features you want, but needs a little updating, you may want to think about a Purchase Plus Improvements mortgage.


This option is designed for people who wish to purchase a home that may require some immediate upgrades:


  • updated electrical service
  • sewer hookup
  • a new roof
  • central air
  • a new furnace
  • new siding
  • eaves
  • soffits
  • fascia
  • doors
  • windows
  • a new kitchen
  • carpeting
  • or any other renovation that would increase the value of the home. 


It is important to know that this program covers permanent updates to the home, but cannot be used for moveable assets such as appliances. This can be a great solution if you find a house you love but realize that it will take some time to save for any renovations that you want to do.


Here’s how it works. Let’s assume that you have a five per cent down payment. Before the mortgage financing is finalized, you will collect written quotes for the repairs or improvements to be done.


When the application for financing is submitted, the request is made for 95 per cent of the purchase price plus 95 per cent of the cost to complete the improvements.


It is important to know that the lender will hold-back the improvement portion of the mortgage until the work has been completed and inspected, normally within 30-60 days of closing.


Once the work has been completed, the lender will advance the balance of the funds and the contractor can be paid.

This means that you will need to find a way to cover the cost of the renovations temporarily, or work with a contractor who is willing to be paid at the end of the project. Some clients use a credit line to cover the costs until the mortgage funds are released.


What does this mean? Let me give you an example, with the client putting five per cent down:


Purchase price:               $400,000 X 95% = $380,000


Cost of improvements:     $40,000 X 95% = $38,000


Total mortgage:               $440,000 X 95% = $418,000


An application is made for a mortgage in the amount of $418,000, which represents 95 per cent of the purchase price plus 95 per cent of the improvements.


On the closing date, the mortgage advanced to complete the purchase is $380,000 plus the original five per cent from the purchaser’s down payment ($20,000), which provides sufficient funds to complete the purchase of $400,000.

The seller is paid in full and the house is transferred in to the name of the purchaser.


After closing, the contractor completes the improvements (normally within 30-60 days after the closing) and the lender advances the hold-back of $38,000.The purchaser pays the additional five per cent of the cost of the improvements ($2,000) and the $40,000 owed to the contractor can be paid. 


Last summer, I worked with clients who bought a rural property. When the septic inspection was done, they were told that the system was on its last legs.They made the decision to use a Purchase Plus Improvements mortgage and replaced the system before they ran into difficulties.


I’ve also work with clients who used the program for cosmetic upgrades.They renovated their kitchen and bathrooms and changed out all of the flooring.They essentially moved in to a brand new home in the area they wanted to live.


The appraisal at the end of their project showed an increase in value of almost $75,000 based on $35,000 worth of improvements they had done.


With this program, purchasers are happy because they have done extensive improvements to their homes with a minimal cash outlay (the balance was financed with their mortgage).


In both cases they get to enjoy an updated home without scrimping and saving to come up with the funds for improvements.

Tracy Head

Mortgage Broker

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Changes Affecting Financing

By Tracy Head • November 14, 2025
I consider myself a lifelong learner, which is part of the reason I love my work. Every day there is something new and exciting to learn, or in some cases re-learn. When I first came back to the mortgage world a more seasoned broker gave me a copy of a handout she used with clients. It talked about the ten most important things NOT to do between removing your financing subject and finalizing the purchase of your home. At the time I remember thinking that the handout sounded patronizing and I assumed clients just understood they shouldn’t do any of the ten things. You know what they say about assuming things. Once or twice my clients have made decisions that have almost jeopardized their financing. The reason this came up for me right now is that I am working my way through a training course which is geared towards helping me re-design my team and my workflow, with the ultimate goal of providing even better support to my clients. One of the changes I am going to implement is adding a list very similar to the original ten things not to do list to my signing packages so that we are all on the same page and avoid any potential challenges down the road. What are the ten things? I won’t go over all of them, but here are a few of the things that have surfaced recently: If you change the closing date on your purchase or if you receive the Notice of Completion on a newly built home, advise your mortgage person right away. Never assume your realtor will do this for you. Do not go out and finance anything without checking with your mortgage person. If you are pushing the upper limit of your buying power even a small loan for furniture might put your financing at risk. Many lenders pull your credit again shortly before your mortgage finalizes. Along the same lines, make sure all of your payments are made on time. Do not co-sign a loan for anyone. Do not quit your job or change employers without talking to your mortgage person ahead of time. Do not spend any of the money you have tucked away for your down payment. If you have money sitting in higher-risk investment better to move them to something more stable in case of market fluctuations. Most people think that once they get the ok to remove their financing subject that their mortgage is a done deal. The small print on every mortgage commitment includes a clause that says something along the lines of “Your financing is based on your current situation. Material changes to your situation prior to the funding of your mortgage may affect your approval.” I’m currently working with a young lady that decided to purchase a boat between the time we had our pre-approval conversation and the day she wrote her offer to purchase. She had decided not to buy a home then found her dream property. We’ve had to look at a few options as the boat payment threw her ratios out of line. She is fortunate that her parents are very supportive and are going to gift her the money to pay off the boat loan, but if she didn’t have that back up plan the new loan would have reduced her borrowing power by over $100,000. The reason I added the comment “without checking with your mortgage person” in the bullets above is that every client’s situation is unique and some of those changes might be just fine. Some might not, and the last thing you want to do is find yourself scrambling to figure out a Plan B shortly before closing.  Best to have the conversation and be certain.

Mortgage Options

By Tracy Head • November 1, 2025
In past columns I’ve covered when no means no and when no means maybe there’s another option. There are many aspects of my work that I love. One is that I learn something new each and every day. No two clients are the same and no two applications are the same. Some are easier than others to put together. Another thing I love is that we have so many options to consider when working on our files. I do find immense satisfaction when I tackle a complicated file and find a great solution for my clients. I am working with an amazing young couple as they build their portfolio of rental properties. They are relatively young but both work incredibly hard and really have their ducks in a row. The plot twist they have is that they both transitioned from salaried positions to being self-employed over the last year. Their credit scores are both in the high 800s (900 is a perfect score), they are both making substantial income, and they have saved over $100,000 for their down payment.  Seems like a slam dunk right? Because they don’t have two years of filed tax returns as self-employed business people our options are a bit limited. There is a program we use in this situation but their scenario does not fit within the guidelines. Their dream home just came on the market so they are wanting to buy and convert their current home to a rental property. This particular home came up in the neighborhood they really want to be in, and homes don’t come up very often. It is immaculate and has a legal suite. They had originally approached their bank and been told it was a hard no. I work with their realtor fairly often and she suggested they give me a call. Within 24 hours we had the approval in place for them. We ended up taking the application to an alternative lender for a two-year term. The interest rate is about .5 per cent higher than a chartered back and there is a 1 per cent fee charged. We weighed out the pros and cons of going this route versus holding off until their next tax returns are filed before purchasing another property. After chatting with their financial advisor and accountant they felt it was worth the slightly higher interest rate to be able to buy the home now. I will say I love straightforward simple applications but in reality those are few and far between. Most of the applications I work on these days seem to have some sort of plot twist like this one so I am very grateful there are so many options available to help clients who may fall a little outside of the standard lending guidelines.