Looking for a Home Equity Loan for Renovations in Ontario?

360Lending is an award-winning mortgage brokerage based in Richmond Hill, Ontario. Over 2,000 homeowners in Ontario have given us 5-star reviews and we have an A+ rating from the Better Business Bureau.

We help homeowners get the lowest rates for home equity loans, home equity lines of credit, refinancing, and other mortgage products.

To get approved for renovation financing, click here to schedule a call with our team.

If you’ve been thinking about upgrading your kitchen, finishing your basement, or modernizing an older home, you're not alone. Thousands of Ontario homeowners turn to home equity loans every year to pay for renovations. Why? Because they’re often one of the most affordable and accessible ways to fund home improvements—especially when compared to high-interest credit cards or unsecured personal loans.

A home equity loan allows you to borrow against the value of your home. You get a lump sum of money up front, and you pay it back over time, usually at a fixed interest rate. It's a secured loan, meaning your home acts as collateral. That’s what makes the rates lower than most other types of financing.

Pay for Your Renovations with a Home Equity Loan

In many cases, a home equity loan can be one of the best ways to finance a renovation. Here’s why:

Lower rates than most credit cards or unsecured loans.

Predictable monthly payments with a fixed rate and term.

Lump sum disbursement, which is helpful if you’re paying contractors or buying materials up front.

Potential to increase your home’s value, especially if you’re upgrading kitchens, bathrooms, or adding living space.

For example, let’s say you need $60,000 to renovate your outdated kitchen and finish your basement. If you use a home equity loan at 8% interest over 15 years, your monthly payment would be around $570. That’s far less than if you used a high-interest line of credit or tried to put everything on a credit card. And if your renovations add $80,000 in resale value, you’ve actually grown your equity even further.

Should You Renovate Before Selling?

That depends on the condition of your home and the market you're in. In many Ontario cities like Toronto, Mississauga, Ottawa, and Kitchener, buyers are looking for move-in ready homes. A few well-planned renovations can help your house stand out and sell for a higher price.

Here are some reasons homeowners renovate before listing:

To increase resale value – Updated kitchens and bathrooms often give a strong return.

To fix issues that could affect a sale – Think leaky roofs, outdated electrical, or poor curb appeal.

To reduce time on market – Homes in better condition often sell faster.

But remember: not all renovations are worth the cost. A fresh coat of paint or new flooring might give you more bang for your buck than a full kitchen remodel. A mortgage broker or real estate agent can help you decide what makes sense based on your local market and budget.

If you plan to sell soon, a short-term home equity loan (or even a HELOC—more on that later) could cover the cost of strategic improvements that help you maximize your sale price.

How Much Can You Borrow for Renovations?

The amount you can borrow with a home equity loan depends on your available equity and the lender’s criteria.

Here’s how it’s usually calculated:

Start with your home’s current market value.

Multiply it by the lender’s maximum loan-to-value ratio (LTV)—usually up to 80% for traditional lenders, or up to 85–90% with private lenders.

Subtract your existing mortgage balance.

Let’s look at an example:

Home value: $800,000

Max LTV: 80%

Max total borrowing: $640,000

Current mortgage: $500,000

Available equity: $140,000

In this case, you could borrow up to $140,000 for renovations using a home equity loan—sometimes even more if you go through a private lender.

The exact amount depends on your credit score, income, and debt load. If you’re borrowing from a bank or credit union, you’ll usually need a credit score of 640 or higher and a debt-to-income ratio below 45%. Private lenders are more flexible but may charge higher rates.

Home Equity Loan Interest Rates for Renovations

Home equity loan interest rates in Ontario depend on a combination of factors, with the property itself playing the most important role. Lenders primarily assess the marketability of the property, including its condition, location, and loan-to-value ratio (LTV). While income and credit history are still considered, they carry less weight compared to the property’s overall security.

For most homeowners looking to use a home equity loan for renovations, the loan is structured as a second mortgage, sitting behind an existing first mortgage. As of 2025, first mortgage rates for well-qualified borrowers are typically in the mid-4% range.

Here’s a more realistic look at current home equity borrowing costs in Ontario:

Home equity loan (2nd mortgage) rates generally start around 6.99% and can go higher depending on the property and borrower profile.

HELOC (home equity line of credit) rates often start around 7.49%, with variable terms and rates influenced by the Bank of Canada’s prime rate.

Rates can vary based on factors like:

The property’s condition and market appeal

The amount of equity you have

The total combined loan-to-value (CLTV) of the property

Your credit and income, which act as secondary considerations

While home equity borrowing rates are higher than first mortgage rates, they are still significantly lower than high-interest alternatives like credit cards (19%+) or unsecured personal loans (11%–18%). A home equity loan also gives you the benefit of fixed payments and a clear repayment schedule, which can make budgeting for your renovation project much easier.

Steps to Get a Home Equity Loan for Renovations

If you’re thinking about using a home equity loan to fund your renovation, your first and smartest step should be to contact an experienced and reputable mortgage broker. A broker works on your behalf to guide you through the process, assess your situation, and shop the market to find the best possible terms for your loan. They have access to a wide network of lenders—banks, credit unions, and private lenders—and can help you navigate the different options, especially if you’re considering a second mortgage.

Here’s how the process typically unfolds:

1. Initial Needs Assessment

Your broker will review your goals, financial situation, and property details. They’ll explain how much equity you may be able to access, based on current lending guidelines and your home’s estimated value.

2. Property Valuation

While you can get a rough idea of your home’s value from online tools, your broker will arrange for a more accurate estimate with lenders-approved appraisers in your area. In most cases, lenders will require a full property appraisal from a licensed appraiser to confirm the home’s condition, marketability, and value.

3. Equity Calculation

Your broker will help calculate this figure to determine your borrowing limit. Lenders typically allow you to borrow up to 80% of your home’s value, minus the balance of your current mortgage. This is known as the combined loan-to-value ratio (CLTV).

4. Collecting Required Documents

You’ll work with your broker to gather documentation needed by lenders. Common requirements include:

Government-issued identification

Recent mortgage statement

Property tax bill

Credit report

Proof of income (employment letter, pay stubs, or bank statements)

5. Submitting the Application

Your broker will prepare and submit the loan application to suitable lenders. They will negotiate on your behalf to secure the most competitive rate and terms based on your unique property and financial profile.

6. Lender Review

The lender will review your application and may request an appraisal if it hasn’t already been done. Private lenders often move faster with less documentation, while banks and credit unions tend to have stricter review processes.

7. Reviewing the Loan Offer

Once approved, you’ll receive a detailed offer outlining:

Interest rate (currently starting at 6.99% for second mortgages or 7.49% for HELOCs)

Loan amount

Repayment terms and amortization period

Fees or closing costs (if any)

Your broker will help you carefully review and understand the offer before proceeding.

8. Signing and Funding

After accepting the offer, legal documents are signed, and funds are typically disbursed as a lump sum for a home equity loan. HELOC funds are made available to draw as needed.

The entire process can take as little as a few days with private lenders or one to three weeks with traditional lenders, depending on how quickly appraisals and documentation are completed.

HELOC vs. Home Equity Loan for Renovations

If you're planning major home upgrades, one of the most common questions is whether to choose a home equity loan or a HELOC (Home Equity Line of Credit). While both let you borrow against your home’s value, they work very differently—and each has pros and cons depending on your renovation goals.

Home Equity Loan (Lump Sum)

You receive the full amount of money upfront.

Interest rate is fixed, so your monthly payments stay the same.

Ideal for large, one-time renovation projects like a kitchen remodel or home addition.

Great for homeowners who want predictability in payments.

HELOC (Line of Credit)

Works like a credit card backed by your home—borrow what you need, when you need it.

Interest rate is usually variable and can change with the market.

You only pay interest on the money you use.

Perfect for long-term or phased renovations (e.g., updating one room at a time over several years).

Let’s say you’re renovating your kitchen and bathroom over 12 months. A home equity loan is ideal if you have set quotes and want to pay contractors right away. But if your renovations will happen in stages, a HELOC might make more sense since you can draw funds gradually.

Some homeowners even combine both. For instance, they’ll take out a home equity loan for immediate upgrades and keep a HELOC in place for future repairs or finishing touches.

What Documents Do You Need to Apply?

Lenders will ask for several documents to assess your ability to repay the loan and determine how much you can borrow. Here’s what you’ll typically need:

1. Two pieces of valid government-issued IDs

Driver’s license and passport are the most common

2. Mortgage Statement

Shows your current balance, lender, and terms.

3. Property Tax Bill

Confirms your homeownership and municipal tax payments.

4. Home Insurance

Lenders need proof that your home is insured.

5. Proof of Income

Recent pay stubs (last 2)

T4s or Notice of Assessment (last 2 years)

12 months of business bank statements (if self-employed)

6. Renovation Plans (Optional)

Some lenders may ask for quotes or a basic summary of your planned improvements, especially for large loans.

And of course, your credit report and score will be reviewed. Lenders want to see a solid repayment history and reasonable debt levels.

Home Renovations with the Highest Returns (ROI)

Financing home renovations through equity only makes sense if the work adds value to your property or improves your lifestyle in a way that feels worth the cost.

Renovations with strong return on investment (ROI):

Kitchen remodels (75–100% ROI)

Bathroom upgrades (60–80% ROI)

Basement finishing (70%+ ROI)

Energy-efficient windows and doors

Curb appeal projects (landscaping, new siding, front door)

Less impactful upgrades (in terms of resale):

Swimming pools

Luxury fixtures or custom designs

High-end audio systems

In Ontario’s competitive housing markets, strategic renovations can give your home a serious edge. And even if you're not planning to sell anytime soon, upgrading your home can make it more enjoyable—and more energy efficient—for years to come.

Talk to a Mortgage Broker About Your Renovations

Before committing to any financing, speak with a licensed mortgage broker in Ontario. A broker can:

Assess your home’s value and equity

Help you compare home equity loans vs. HELOCs

Find lenders that match your income, credit, and renovation goals

Get you approved quickly—even if the banks say no

They can also help bundle your renovation loan with other financial goals, like consolidating debt or preparing to sell your home.