A Quick Guide: Home Renovation Financing

Looking to renovate your home but don’t have a savings account designated for the project? Let’s talk about Renovation Financing options for your next project. Home renovations, improvements, and repairs can increase the comfort of your house, make it more energy-efficient and increase your resell value. The largest projects are the most expensive and here are some of the most popular:

  • Update your kitchen
  • Upgrade your bathroom
  • Reface or repaint the exterior or interior
  • Replace your roof, furnace, water heater or air conditioning
  • Build a new garage or addition

The costs to undergo a basic home renovation really depend on how ambitious the project is, whether it is a renovation update or a total overhaul there are a number of financing options.

kitchen renovations


Ideally, you will have savings set aside for the project, but life happens, we get it. Maybe you do have a savings account but won’t cover the project you wish to complete. You have the option of credit cards to cover costs but when an interest rate of 12.99% is among the lowest in Canada it is not cost-effective to finance your home renovation this way. Ask us about financing and credit options.


Personal Loan

Personal loans have lower rates than credit cards, the lowest average is around 5.6% but that all depends on annual percentage rates and approved financing. The loan will have parameters set between the applicant and the lender to determine for how long you must pay the loan back and the loan (term). This is great if you have a giant renovation project and the cost is set by a contractor.


Personal Line of Credit

A line of credit is different than a personal loan and better for ongoing or long-term renovations. A line of credit is a revolving account and funds are available when you need them, you are only charged interest for the funds you borrow at a variable rate. Lines of credit also have interest rates lower than a credit card but unlike a loan, you can borrow up until the limit and access funds even after paying it off. Personal lines of credit are ideal for the DIYer because you can access what you need as the project dictates and as you pay down the limit it frees up more funds.


Secured Line of Credit and Home Equity Loan

A home equity line of credit (HELOC) is a secured line of credit based on your home equity. The lender uses your home as a guarantee that you’ll pay back the money you borrow and come with preferred interest rates. HELOCs are revolving credit, just like a line of credit so you can borrow money, pay it back, and borrow again, the total loans (mortgage plus HELOC) are limited up to 80% of your home’s value. However, because they’re secured by your home’s equity, they are set-up costs and legal fees involved. Speak with a qualified mortgage specialist to learn more about this financing option.


Mortgage Refinancing

Refinancing may offer a better interest rate than on a credit card or loan, just like a HELOC there will be set-up costs. The interest rate on mortgage refinancing is fixed and you will be able to make small, consistent payments spread over a long time period. Mortgage refinancing is the most popular so long as you meet the eligibility criteria. This method of financing your home renovation is optimal if you have a large sum of equity in your home and if you have a good credit rating.


Grant and Rebate Options

Federalprovincial and municipal governments and local utilities may offer grants and rebates, some have stipulations determined by income brackets or some are only available to energy-efficient home improvements.


North Canadian Construction Group is here to help you realize your home renovation dreams. Contact us to explore all the financing options we will help you make your house a home.


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