Do NB banks offer purchase-plus-improvement mortgages for renovations?

Yes, most major banks in New Brunswick offer purchase-plus-improvement mortgages that allow you to finance both the home purchase and planned renovations in a single mortgage. These programs are particularly valuable in NB's housing market where many homes need updates to windows, insulation, heating systems, or kitchens and bathrooms.

Purchase-plus-improvement mortgages let you borrow up to 80% of the home's projected value after renovations rather than just the purchase price. For example, if you're buying a $250,000 NB home that will be worth $320,000 after a $40,000 kitchen and bathroom renovation, you could potentially finance up to $256,000 (80% of $320,000) rather than being limited to $200,000 (80% of the purchase price). This gives you access to renovation funds at mortgage rates rather than higher personal loan or line of credit rates.

The application process requires detailed renovation plans and contractor quotes upfront. Banks want to see specific scope of work, material specifications, timeline, and firm quotes from licensed contractors before approving the additional funds. This means you need to have your renovation planned in detail before closing on the home purchase. The bank will typically hold the renovation portion in a separate account and release funds in stages as work is completed and inspected.

Popular programs in NB include RBC's HomeLine Plan, TD's HomeReady program, and Scotiabank's Purchase Plus Improvements mortgage. Credit unions like UNI Financial Cooperation and NBTA Credit Union also offer similar programs, often with more flexible terms for local borrowers. Each lender has different requirements for minimum renovation amounts (typically $5,000-$10,000), maximum renovation percentages (usually 20-40% of the home's value), and eligible renovation types.

Eligible renovations typically include kitchen and bathroom updates, flooring replacement, window and door upgrades, roofing, siding, insulation improvements, heating system upgrades, and basement finishing. Most lenders require that renovations be completed within 12-18 months of closing. Cosmetic work like painting is often excluded, but structural improvements, energy efficiency upgrades, and major mechanical updates are usually approved.

The key advantage in NB's climate is financing energy efficiency improvements at mortgage rates. Upgrading windows to triple-pane, adding insulation, installing a heat pump, or replacing an old oil furnace can significantly reduce your heating costs while improving comfort. These improvements often pay for themselves through energy savings over 5-10 years, especially with current energy prices.

Consider the timing carefully with NB's renovation seasons. If you're buying in fall or winter, plan interior renovations (kitchen, bathrooms, flooring, electrical upgrades) for immediate completion and save exterior work (siding, roofing, windows) for the following spring and summer. Banks are flexible about this timing as long as all work is completed within the agreed timeframe.

Work with a mortgage broker familiar with NB renovation lending to compare programs and find the best fit for your situation. They can help navigate the application process and ensure your renovation plans meet lender requirements before you firm up your home purchase.

Need help finding experienced renovation contractors to provide the detailed quotes required for your purchase-plus-improvement application? New Brunswick Renovations can connect you with local professionals who understand these mortgage programs and can provide the documentation banks require.