Apply for Metro Vancouver mortgages that help you finance renovations or new home building projects

When you find the house you want to renovate, you’ll make an offer through your real estate agent, and wait to be accepted. At this point, you should have a very good idea of what it will cost to make repairs or changes to the property. You can ask a contractor for a rough, but realistic, initial quote.

After the seller agrees to your offer, the contractor will need to come to the house to provide an accurate, detailed quote, with a solid plan, for the work that needs to be done. This can’t be ‘willy nilly.’ It has to be professionally done, and written down, so the lender knows you are serious.

The renovation quote is then taken to your mortgage broker, who runs it by the lender (such as a bank). The lender takes a look at your plan, and decides whether or not to revise your mortgage, so that it includes your renovation costs.

When your lender agrees to revise the mortgage, it becomes a purchase plus improvements plan. The funds for your renovation are sent to your lawyer, where they are held until an inspection on the renovated house is passed.

In the meantime, you take possession of the house, and begin renovation work. Many contractors will ask for payment or deposits before the bank releases your approved funds. You can arrange to pay out-of-pocket with lines of credit, some savings or otherwise. Or, if you find a willing contractor, they may do this on the premise of being paid by the lawyer when all is said and done.

No matter who is put on hold for payment, they won’t be waiting long; these renovations have deadlines associated with them. They typically must be completed within 90 to 180 days.

Don’t forget; you’ll be a homeowner at this point, paying your regular, monthly mortgage bills, based on your total borrowed amount. Also, in most cases, mortgage insurance will still apply, on top of your mortgage fee, even under this program. You’ll need to factor these details into your budget, especially when considering your contractor’s payment schedules.

You notify your mortgage broker or lender that the renovation on the house has been completed. The lender will send their own appraiser or inspector to check that everything has been done to spec.

When the lender’s requirements are satisfied, they will advise your lawyer to release the funds. Moneys can be used to pay your contractor, or to reimburse you for the fees you already paid towards the project.

From here on out, you pay your monthly mortgage payments as planned, and enjoy your new, picture-perfect home!

• Most approved projects are based on homes that can easily be re-sold, in case things ‘go south.’ That means typical-looking, reasonable-sized homes with rental units, near a city. If you want to build an underground bunker 5 hours from the nearest international airport, you probably won’t get approved for this type of mortgage. That’s an extreme example but, you get the idea. Off-grid cabins in the wild, or houses on 10-acre farms probably won’t fly either.
• Draw allowances are contingent on work being completed. They are not available for work-to-be-done.
• Further to the above, you’ll need cash to pay for contractors and supplies before the lender releases funds via your lawyer, per your agreed-upon schedule of draws. The contractor needs to agree to a similar schedule ahead of time. The lender will check to see that your payment schedule with the contractor doesn’t veer too far off from your draw schedule. They’ll also want proof that you have access to sufficient cash to keep the project moving until draws are released, or in case you go over-budget.
• The builder must be part of a New Home Warranty Program (where your project will be registered). They must be able to build according to the National Building Code of Canada. It goes without saying they should be licensed contractors, too.
• You can act as the builder, if you can prove you have the knowledge and skill to do it. However, even if you do, this will take up a considerable amount of time and energy on your part, which may not be viable. Of course, the quality of your build must meet all the above standards.
• In some cases, you can buy the lot, and present the title deed to the lender. In other cases, the contractor will own the lot, and agree to pass it to you after they are paid in full. You’ll need to make an official purchase offer to show the lender that this is your plan.
• Blueprints, design plans and building permits should be ready-to-go for your mortgage approval. You’ll need to pay for this out-of-pocket.
• Inspections will be needed to verify each stage of completion, before draws are released. Most of the time, these services will need to be paid for by you.
• Some construction mortgages will only release funds after full completion, and not in stages. These types of mortgages are more common.
• Funds held by your lawyer, from your lender, will always withhold a 10% builder’s lien. This is in case you owe your builder for any outstanding bills at the end of your project. It is required by law.
• If your project goes over-budget, and you don’t pay your builder, they can file a builder’s lien against your home. So, it is critical to avoid going over-budget.
• You won’t be able to adjust your mortgage for home upgrades, once it is approved. There may be other means of obtaining funds, if it turns out you do want to make changes that will go over budget. Your mortgage broker can help you investigate your options.

15% – used towards excavating the land and completing the foundation. This is optional, for insured mortgages only.

25% – used towards roofing and weather protection. The home should be about 40% complete, airtight and secured.

25% – used towards plumbing, electrical wiring, drywall, furnace installation, exterior wall cladding, etc. The home should be 65% complete.

20% – used towards kitchen cupboard installation, bathroom completion, door hanging, tile and floor laying, painting etc. The home should be 85% complete.

15% – used towards all other work on the home, such as exterior and seasonal work. The home should be 100% complete, and ready for occupancy.