The Mortgage Plus Improvements product is a financing tool that allows you to roll improvement costs for projects like adding an ADU, laneway house, garden suite, or legalizing a basement directly into your purchase or refinance loan at competitive prime lending rates. It enables you to keep your capital moving instead of draining it or using high-interest private money.
The lender looks at the as-complete value of the property upfront through an appraisal and will only lend up to 80% of that value. If your total requested loan amount exceeds 80% of the as-complete value, you must pay the difference out of your own pocket unless the appraised value comes in higher.
First, the maximum loan amount is 80% of the as-complete appraised value. Second, you make interest-only payments during the improvements phase at competitive prime rates. Third, the property must be functional with a kitchen, bathroom, and bedroom and cannot be stripped to the studs. Fourth, if you are adding a unit such as an ADU or laneway house, you must have your permits approved and at hand before the lender advances money.
Unlike traditional construction financing loans, this product does not hold back funds for construction liens. You receive the full improvement amount in stages as the work is completed and inspected, rather than having the lender claw back money to hold for potential liens.
Yes, if you qualify personally for the extra capital, the lender can add it to the long-term loan once the work is completed. This means your final mortgage amount could be higher than the initial improvement loan, allowing you to access the additional equity you created.
