Purchase Plus Improvements

Tracy Head • March 19, 2026

Hammer, Nails… and a Mortgage That Sees Potential

Over the years I’ve noticed a pattern: buyers fall into two camps. The “this house is perfect” crowd… and the “this could be perfect if we just fix a few things” crowd.

Today, we’re talking about the second group—and one of the most underused tools in the Canadian mortgage world: the purchase plus improvements mortgage.

What Is It (and Why Should You Care)?

A purchase plus improvements mortgage lets you roll renovation costs into your mortgage at the time of purchase. Instead of draining your savings—or worse, putting renovations on a high-interest line of credit—you finance those upgrades at your mortgage rate.

In plain English: you buy the house and fix it up, all in one tidy package.

You get to enjoy the renovations while you live in your home, rather than scrambling to renovate or update when you are getting ready to sell.

Lenders like this because you're increasing the value of the home. You should like it because you're borrowing at (usually) the cheapest rate you'll ever get.

Let’s say you’ve found a home priced at $700,000. It’s solid—but a little tired. You want to:

Upgrade a dated bathroom
Replace an aging furnace
Put on a new roof

Total improvement budget: $40,000

With a purchase plus improvements mortgage, your financing is based on the “as-improved” value, meaning:

Purchase price: $700,000
Improvements: $40,000
Total financed value: $740,000

Because the purchase price exceeds $500,000, the minimum down payment in Canada is not 5% flat.

It’s calculated as:

5% on the first $500,000 = $25,000
10% on the remaining $240,000 = $20,000

Minimum required down payment: $49,000

Mortgage Before Insurance

Total value: $740,000
Down payment: $49,000
Base mortgage: $691,000

Adding the CMHC Insurance Premium

Because your down payment is under 20%, mortgage default insurance applies.

At this loan-to-value (roughly 93.4%), the CMHC premium is 4%.

CMHC premium:
$691,000 × 4% ≈ $27,640

This premium is typically added to the mortgage, not paid upfront.

Total mortgage after insurance: ≈ $712,421

What Does That Payment Look Like?

Now let’s plug that into real numbers:

Mortgage: $712,421
Rate: 3.99%
Amortization: 25 years

Estimated monthly payment: ≈ $3,750–$3,760/month (call it $3,755/month for coffee-shop accuracy).

Why This Still Makes Sense

Here’s where people sometimes hesitate:
“Wait—I’m paying insurance and financing renovations?”

Yes. And in most cases, it still works in your favour.

Because:

You’re financing renovations at 3.99%, not 8–10%+
You’re improving the home’s value immediately
You’re avoiding the markup baked into fully renovated homes

In other words, you’re not just spending money—you’re strategically improving the value of your new home.

How It Actually Works Behind the Scenes

Here’s the part most buyers don’t realize:

You submit quotes for the renovations upfront
The lender approves the total (purchase + improvements)
The purchase closes as usual
The renovation funds are held back by your lawyer
You complete the work
Funds are released once the work is verified

It’s a bit of paperwork—but compared to juggling contractors and separate financing? It’s a win.

Why I Recommend This More Often Than You’d Think

After years in this business, I can tell you this - the “perfect home” usually comes with a premium price tag.

But the “almost perfect” home? That’s where the opportunity is.

With a purchase plus improvements mortgage, you can sometimes:

Buy in a better neighborhood
Customize the home to your taste
Avoid bidding wars on fully renovated properties
Finance upgrades at mortgage rates (instead of 8–10%+ elsewhere)

If you’re considering this route, here’s my advice:

Get detailed quotes (not ballpark guesses)
Plan for a buffer—renovations love surprises
Work with a broker early (this is not a last-minute add-on)

And most importantly: don’t be scared of a home that needs work. Some of the best purchases I’ve seen over the years started with the phrase, “Well… it’s not perfect, but…”

Final Thought

A purchase plus improvements mortgage isn’t just financing—it’s strategy.

It’s the difference between settling for someone else’s vision… and building your own, from day one.

And in a market like Canada’s, that kind of flexibility isn’t just nice to have—it’s powerful.

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Tracy Head

Mortgage Broker

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So Your Mortgage Is Approved

By Tracy Head • March 6, 2026

So Your Mortgage Is Approved… Now Don’t Break It By the time a buyer gets the call that their mortgage has been approved, the reaction is usually somewhere between relief and a sudden urge to celebrate like they’ve just won the Stanley Cup. After weeks of paperwork, bank statements, document requests, and answering questions about that mysterious $73 e-transfer from your cousin, you’ve made it to the home stretch. But here’s the thing many buyers don’t realize: a mortgage approval isn’t the finish line. It’s more like the last lap before the ribbon. And in this final stretch, there are a few things that can still trip you up if you’re not careful. As a mortgage broker who has watched this happen more times than I care to admit, allow me to offer a friendly list of things you absolutely should not do between mortgage approval and possession day. 1. Do Not Finance a New Car (Even If It Smells Amazing) You might think, “What better way to celebrate a new house than with a new truck in the driveway?” The lender disagrees. Taking on new debt before your mortgage funds can change your debt ratios, which were carefully calculated to get you approved in the first place. I once had a client proudly tell me about the brand-new SUV they bought the week before closing. Unfortunately, the lender was less impressed. Celebrate later. The house comes first. The new car can wait. 2. Do Not Quit Your Job to ‘Follow Your Passion’ I’m a big supporter of people chasing their dreams. But if your dream involves leaving your stable salaried position to start a kombucha brewing company three days before your mortgage funds… perhaps give that dream a couple more weeks. Lenders like stability. A sudden career change can send underwriting departments into mild panic mode. 3. Do Not Open New Credit Cards for Furniture, Appliances, or “Just in Case” It’s very tempting. You walk into a furniture store, see the perfect sectional, and suddenly there’s a cheerful salesperson offering “12 months no payments!” It sounds harmless, but that new credit line can affect your credit score and your debt calculations. Also, you may be shocked to learn this: the house will still accept furniture purchases after you own it. 4. Do Not Move Money Around Like You’re Running an Offshore Hedge Fund During the mortgage process, lenders carefully verify where your down payment and funds are coming from. If large, unexplained deposits suddenly start bouncing between accounts, it can raise questions. Questions lead to paperwork. Paperwork leads to stress. Stress leads to calling your mortgage broker at 9:45 p.m. Keep things simple and predictable until the deal is done. 5. Do Not Co-Sign a Loan for Someone Else You may be the generous type. A friend or family member might ask you to co-sign for a car or a line of credit. As noble as that is, lenders will treat that new obligation as your debt too. Even if your cousin promises they’ll “definitely make the payments.” Your lender prefers promises backed by math. 6. Do Not Miss Any Bill Payments Your credit report was likely pulled during the approval process, and lenders sometimes check again before funding the mortgage. A missed payment can ding your credit score at the worst possible moment. In other words, now is the time to be the most financially responsible version of yourself. The Bottom Line Once your mortgage is approved, the best strategy is surprisingly simple: keep everything exactly the same until your home officially closes. Same job. Same credit habits. Same bank accounts. Think of it like carrying a tray of drinks across a crowded room. You’re almost there—now is not the time to start dancing. The good news? Once the keys are in your hand and the deal is finalized, you’re free to celebrate however you like. Buy the couch. Paint the walls. Host the housewarming party. Just maybe hold off on the kombucha startup for a week or two.

Reverse Mortgage follow up

By Tracy Head • February 23, 2026

Not long after my last column about reverse mortgages went live I received a thoughtfully written email from a reader challenging several of the points I made in my article. He raised concerns about the cons around reverse mortgages and said he felt that I wasn’t diving into the potential negative impacts of reverse mortgage products. Most of the concerns boiled down to the erosion of equity in seniors’ most significant asset due to the compounding of interest over time. He felt that I didn’t show any calculations so people would not see the long-term cost of a reverse mortgage. When I work with my reverse mortgage clients I show them projections that include the interest cost. What people may not consider is the appreciation in value of homes over time. Reverse mortgage lenders don’t automatically go to the maximum allowable amount for every client (ie: “up to 55% of the value of the home”). Mortgage size is determined by the age of the client and the type and location of the home that they are in so as not to erode all of the equity in the home. Mortgages are done on a sliding scale so the younger they are the less equity clients have access to. The other piece to understand is that not every client pulls the entire amount they are approved for upfront. I encourage my clients to only pull what they require at the time and to have the rest available for if and when they need it. Initially I was not a huge fan of reverse mortgages for a lot of the reasons that he shared. However, I have many clients who are house rich with very limited income. People living on CPP and OAS can’t afford the basic necessities never mind any frills. Which leads to another reason I see the value in reverse mortgages. Many of the clients I work with have overextended themselves using credit cards or personal lines of credit and are in the position that they are making the minimum payment on their credit facilities by applying for more credit cards or loans, which leads to a spiral of increasing balances month over month with no way to repay these debts. Downsizing doesn’t always work because moving to a smaller home often means now they have a strata payment. Even if they downsize and have cash in the bank to cover living expenses, the end result is that they are still eroding that equity and now are not in the home they spent their lives in. I’ve seen reverse mortgages impact seniors in positive ways that you can’t even imagine. I’ve had clients supporting their middle-aged children while not having money to buy groceries. I’ve worked with clients who have needed to renovate their homes for accessibility issues due to health concerns as they age. I’ve seen clients leverage the equity in their homes to buy vacation homes. There are many types of clients who use reverse mortgages to achieve their financial goals. I do find that some of the loudest objections come from the families of clients. In these situations I first ask my clients if their families know the true extent of their financial distress. Next I ask if they would like to include trusted family members in the conversation so that we can address any concerns so that everyone is on the same page. Not all reverse mortgage clients are naïve. Many have already done their homework before they call.