This mortgage solution is ideal for Canadians who are purchasing a home in need of upgrades that will increase the value of the house. For instance, a new roof, new flooring, windows etc.

Under this program, the buyers must obtain a quote from a contractor/contractors to show to the bank how much funds are required to complete the improvements. The bank will advance the improvement portion of the mortgage after the work has been completed.

For example, Mr. Smith is buying a $200,000 house with 5% down. Mr. Smith also wants to replace the old carpet and put new kitchen cabinets. He obtains a quote from a contractor for 10,000. Total required mortgage is now 210,000. Mr. Smith will need to put 5% down or 10,500 down. On possession date the bank advances 190,000 (95% of the purchase price – 200,000), and hold back on to the improvement portion until it’s completed. When the improvements are done, the bank advances the remaining 9,500, so that the contractor gets paid.

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