Renovation Financing FAQs: Definitions and Basics

Feeling overwhelmed by the endless jargon around renovation financing in Canada? You are not alone. Financing renovations with home equity is a major financial decision. This is why you must understand the definitions and basic mechanics of renovation financing, so you can feel confident and informed throughout the process.

Our team at 360Lending created this guide to cut through the noise and give you the foundational knowledge you need to borrow responsibly. This guide will help you understand the Definitions and Basics of renovation financing.

How to Borrow Money for Home Renovations in Canada?

The best way to finance major home renovations in Canada is by leveraging your home equity. This is done primarily through a Home Equity Line of Credit (HELOC) or a cash-out refinance. Both options provide large funds at low, secured interest rates, which are significantly cheaper than high-interest credit cards or personal loans.

Can You Use Home Equity for Home Renovations?

Yes, using home equity is the primary and most cost-effective method for funding major renovations. You can access up to 80% of your home's value (minus your mortgage) via a HELOC or refinance to get the necessary funds. This strategy treats the renovation as an investment by using low-cost debt.

What Are The Renovation Financing Options in Ontario?

The top options in Ontario are Home Equity Lines of Credit for flexiblity, a cash-out refinance for a single lump sum at the lowest rate, and a home equity loan (second mortgage). These beat typical in-store retailer financing which often carries higher interest rates and shorter, inflexible repayment terms. government grants (like the Greener Homes Grant) can also be used to offset costs.

Should I Get a HELOC or Home Equity Loan for Renovations?

A HELOC is best for ongoing or uncertain renovations because you only pay interest on the money used. A home equity loan (second mortgage) is best if you need a fixed lump sum for a clearly budgeted project and prefer a fixed interest rate and predictable monthly payments.

Can You Get A Home Improvement Mortgage With Bad Credit?

Yes, you can get a secured loan for home improvements even with bad credit. Lenders who focus on equity, such as B-lenders, will approve you based on the value of your home and equity, rather than your credit score. These loans are often structured as a second mortgage.

How Much Does a Kitchen Renovation Cost in Ontario?

A typical mid-range kitchen renovation in Ontario costs between $25,000 and $60,000, with custom or high-end projects easily exceeding $80,000. The final cost depends heavily on materials, cabinet upgrades, new appliances, and whether you are changing the layout or plumbing.

How Much Does a Roof Replacement Cost in Ontario?

The cost of a roof replacement in Ontario depends on the roof size, materials (asphalt shingles vs. metal), and pitch. A standard asphalt shingle roof replacement typically costs between $7,500 and $15,000, while more complex or premium metal roofing can cost over $25,000.

How Much Does a Bathroom Renovation Cost in Ontario?

The cost of a bathroom renovation in Ontario generally ranges from $10,000 for a simple update to $25,000 for a full remodel. Costs increase significantly if you move plumbing fixtures, install high-end finishes, or convert a half-bath into a full bath.

How Much Does a Basement Renovation Cost in Ontario?

The cost for a basement renovation in Ontario varies significantly by purpose. Finishing a standard basement typically costs between $30,000 and $60,000. Adding a legal rental suite (secondary unit) is more expensive, often costing $75,000 to over $120,000 due to building code requirements.

What is the Canada Greener Homes Grant?

The Canada Greener Homes Grant and Loan is a federal program that offers homeowners up to $5,000 in grants and an interest-free loan of up to $40,000 to make energy-efficient home retrofits (e.g., insulation, heat pumps). The goal is to help Canadians reduce energy consumption and lower utility bills.

What is the Ontario Home Renovation Savings Program?

The term "Ontario Home Renovation Savings Program" generally refers to government rebates or incentives focused on energy efficiency (like the Greener Homes Grant) or specific provincial tax credits. It is not a single, ongoing provincial loan program, so you must check for current federal and utility-based rebates available in Ontario.

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