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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Importance of a PreApproval

By Tracy Head • May 16, 2026

There’s a moment I see all the time in this business. A buyer walks into an open house “just to look,” falls completely in love with the place, and by supper time they’re talking about writing an offer. It’s exciting. It’s emotional. And sometimes, it’s exactly where people get themselves into trouble. I can tell you one of the smartest things a buyer can do before house hunting is get a proper mortgage pre-approval in place. Not the casual “I think we qualify for around this amount” conversation. I mean an actual reviewed pre-approval with income, down payment, credit, and monthly budget all looked at carefully. Because once you’re standing in someone else’s dream kitchen imagining where your coffee maker will go, logic has a funny way of leaving the building. A pre-approval does a few very important things. First, it tells you what a lender is likely willing to lend you. That sounds obvious, but many buyers are shocked to discover that what they want to spend and what the bank is comfortable approving are two very different numbers. Second, it helps you shop with confidence. In competitive markets, sellers take pre-approved buyers much more seriously. A seller who has two similar offers in front of them will almost always feel more comfortable with the buyer who already has financing lined up. But here’s the part I think matters even more — a pre-approval gives you the chance to figure out what home ownership will actually feel like every month. And this is where many people make a mistake. They focus only on the mortgage payment. The mortgage payment is important, of course, but it’s only one piece of the puzzle. Before writing an offer, buyers should sit down and calculate the total monthly cost of the home. That means including: Mortgage payment Property taxes City utilities Home insurance Strata fees, if applicable Heating costs Potential maintenance expenses Because the difference between “technically approved” and “comfortably affordable” can be huge. Let’s use a simple example. Suppose you purchase a home for $650,000 with a reasonable down payment. At current interest rates, your mortgage payment might land somewhere around $3,100 per month. At first glance, that may seem manageable. But then we add: Property taxes: $350/month Utilities: $200/month Home insurance: $140/month Strata fees: $450/month Suddenly the true monthly housing cost is closer to $4,240 per month. That’s a very different conversation. And if you haven’t done those calculations ahead of time, you may find yourself house-rich and lifestyle-poor after possession day. I often tell clients this: your home should support your life, not consume it. You still want room for groceries, kids’ sports, travel, retirement savings, and the occasional dinner out where nobody has to do dishes afterward. Another benefit of getting pre-approved early is discovering issues before they become emergencies. Sometimes we uncover small credit issues, missing documents, or income challenges that can be fixed with a little planning and time. It’s much better to solve those things before you fall in love with a home than three days before financing conditions are due. And please remember — just because a lender says you qualify for a certain amount does not mean you have to spend that much. Some of the happiest homeowners I know bought below their maximum approval and left themselves breathing room financially. Funny enough, those are usually the people sleeping best at night when interest rates rise or life throws a curveball. Buying a home should feel exciting, not terrifying. So before you start measuring living rooms for sectional sofas or debating paint colours, take the time to get a proper pre-approval completed and run the real monthly numbers carefully. Future-you will be very grateful.

Owning vs. Renting: A Broker’s View from the Front Lines

By Tracy Head • May 4, 2026

After a couple of decades in the Canadian mortgage world, I’ve learned that the “rent vs. buy” debate isn’t really about right or wrong—it’s about timing, lifestyle, and how comfortable you are trading flexibility for long-term wealth building. Let’s walk through both sides with some real numbers, because that’s where the story gets interesting. The Case for Buying: Building Equity (and Stability) Let’s assume you purchase a home for $600,000 CAD with a 20% down payment ($120,000), leaving you with a $480,000 mortgage at a 4% interest rate , amortized over 25 years. Monthly mortgage payment: ≈ $2,530 First-year interest portion: roughly $19,000 First-year principal paydown: roughly $11,000 That principal portion is the quiet hero here. Every payment chips away at your loan and builds equity—essentially forced savings. Fast forward 5 years: You’ve paid down roughly $60,000–$70,000 in principal If the home appreciates at a modest 3% annually , your $600,000 home could be worth about $695,000 Your equity position: Original down payment: $120,000 Principal paid: ~$65,000 Appreciation: ~$95,000 Total equity: ~$280,000 That’s a meaningful wealth position built largely through time and discipline. Other advantages: Predictable housing costs (especially with a fixed rate) Protection against rising rents Freedom to renovate and personalize Leverage: you control a $600K asset with $120K down The Reality Check: The Costs of Ownership Owning isn’t just about the mortgage. On that same $600,000 home, you might also be looking at: Property taxes: $3,000–$4,000/year Maintenance: ~1% annually (~$6,000) Insurance: $1,500–$2,000/year So your true monthly cost isn’t $2,530—it’s closer to $3,200–$3,500 when everything’s factored in. And unlike rent, surprises are your responsibility. Roof leaks don’t call the landlord—they call your bank account. The Case for Renting: Flexibility and Liquidity Let’s say a comparable home rents for $2,500/month . Right away, you’re saving: ~$700–$1,000/month compared to owning (after ownership costs) Now here’s where renters can quietly win— if they’re disciplined . Investing the difference: If you invest $800/month at a conservative 5% annual return : After 5 years: ~$54,000 After 10 years: ~$125,000 Add to that your original $120,000 down payment (which you didn’t tie up in real estate), also invested: $120,000 at 5% over 5 years: ~$153,000 Total investment portfolio after 5 years: ~$207,000 That’s not far off the homeowner’s equity position—and it’s far more liquid. The Trade-Offs: It’s Not Just Math Here’s where the decision gets personal. Buying tends to win when: You plan to stay put for 5+ years You want stability and control You’re comfortable with maintenance and unexpected costs You value long-term wealth building through real estate Renting shines when: Your lifestyle or job requires flexibility You prefer predictable monthly costs You’re disciplined about investing savings You’re wary of market fluctuations or high entry prices A Final Thought from the Broker’s Desk I’ve seen clients build substantial wealth through homeownership—and I’ve seen others feel financially stretched because they bought too soon or too much house. On the flip side, I’ve met renters who quietly built six-figure investment portfolios… and others who simply spent the difference. The truth? Both paths can work beautifully—or poorly—depending on behaviour. If you’re buying, do it with a long-term mindset and a financial cushion. If you’re renting, treat your savings like a mortgage payment to your future self. Either way, the goal isn’t just having a roof over your head—it’s making sure that roof supports the life you actually want to live.