Fixer Upper or Purchase Plus Improvements Mortgage: What BC Buyers Need to Know

By Jen Lowe – Mortgage Broker

You’ve found “the one” — a home with amazing bones in British Columbia — but it needs work. Maybe it’s cosmetic, maybe it’s structural, maybe it’s just not move-in ready.

So what are your options? Do you buy as-is and renovate later? Or can you finance the purchase and the improvements up front?

Today I’m breaking down the difference between buying a fixer-upper the traditional way versus using a Purchase Plus Improvements mortgage — and which makes sense in BC’s real estate market.

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The Traditional Fixer-Upper Approach

This is the route most buyers start with:

1. You get pre-approved for a standard mortgage

2. You make an offer on the home “as is”

3. Closing happens with a regular mortgage

4. You renovate using personal savings, renovation loans, credit, or unsecured financing

There’s nothing wrong with this approach — and for many buyers it works fine — as long as you have the cash flow and savings to cover the updates.

But here are the downsides:

• Renovations must be paid for after closing

• You may need multiple sources of financing (credit cards, lines of credit, etc.)

• You might end up paying higher interest on renovation costs

• Budget overruns can become real stress points

For cosmetic updates (paint, flooring, minor kitchen refresh), this traditional route usually works. But what if the work is major?

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What Is a Purchase Plus Improvements Mortgage?

A Purchase Plus Improvements mortgage lets you borrow money within your mortgage to cover renovations before or during the purchase.

Here’s how it works:

• You secure financing for both the purchase price and the estimated renovation costs

• The lender holds renovation funds in a holdback account

• As renovation work is completed, funds are released (usually based on receipts or draws)

This means you don’t need separate financing like a personal loan or line of credit — everything is wrapped into one mortgage.

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Why It Matters in BC’s Market

BC home prices — whether in Metro Vancouver, the Fraser Valley, Vancouver Island, the Interior or the North — are high. Many buyers are priced out of fully renovated homes.

But with a Purchase Plus Improvements mortgage, you can:
✔ Buy a home with great location and potential
✔ Finance needed improvements upfront
✔ Avoid high-interest consumer debt for renovations
✔ Simplify closing and renovation financing

In markets where inventory is low, this can be a game changer.

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Key Differences: Traditional vs. Purchase Plus Improvements

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What Kinds of Renovations Qualify?

Every lender has specific rules, but generally:

Acceptable renovations include:

• Kitchen and bathroom upgrades

• Replacing roof, windows, doors

• Structural repairs

• Foundation and electrical updates

• Adding living space

Not typically funded:

• Luxury finishes

• Landscaping

• Pools

• Furnishings

The renovation has to add value to the property and make it more marketable.

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How Lenders Value the Property

With Purchase Plus Improvements, lenders will underwrite based on the post-renovation value.

That means:
✔ They may ask for a contractor quote
✔ They may require a detailed renovation plan
✔ They may request an appraisal based on the future value

This is different from a traditional mortgage where lenders only see the current value.

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Who It Works For in BC

A Purchase Plus Improvements mortgage can be a great fit if:

• You’re comfortable with renovations, not just cosmetic but functional upgrades

• You want to avoid consumer debt for renovation work

• You have a renovation budget and contractor quotes ready

• You want one mortgage instead of multiple debts

It’s especially useful for:

• Buyers in competitive markets who have to compromise on condition to get in

• Investors looking to add value

• Families wanting to customize a home without high-interest renovation loans

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What You Need to Get Started

Here’s what most lenders will ask for:

1. Renovation Plan

   • Detailed list of work

   • Timeline and scope

2. Quotes or Estimates

   • Quotes from contractors (three is ideal)

   • Breakdown of materials and labour

3. Post-Renovation Value

   • An appraisal may be needed

   • Comparable homes after renovation

4. Savings or Equity

   • Enough down payment to meet minimum requirements

   • Funds to cover unexpected overruns

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The Pros and Cons: What You Should Know

Pros
✔ One source of financing
✔ Lower interest than credit cards/lines of credit
✔ Built-in plan for renovations
✔ Better control of cash flow

Cons
✘ May require more upfront documentation
✘ Renovation timeline must be realistic
✘ Funds are released in stages, not all at once

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Is a Purchase Plus Improvements Mortgage Right For You?

If you’re buying a home in BC that needs significant improvements, and you want:

• One loan instead of many

• Better interest rate control

• A path to increase home value on your terms

• A lender that funds renovations responsibly

Then yes — this can be a strong solution.

But if you’re doing purely cosmetic work or have the cash to renovate without borrowing, a traditional purchase plus personal financing may still be appropriate.

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Next Steps: Start With a Plan

Here’s how to move forward:

📌 Get pre-approved — know what you qualify for
📌 Create a renovation budget and contractor quotes
📌 Understand holdback requirements with your lender
📌 Build a timeline that matches the financing plan

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Need Help Figuring It Out in BC?

I’m Jen Lowe, Mortgage Broker, and I help buyers across British Columbia make smart financing decisions — including whether a fixer-upper or a Purchase Plus Improvements mortgage is right for you.

Let’s look at your goals, renovation plans, and budget — and choose the smartest path to ownership.