Pay for your renovation with the equity you have already built.
A kitchen, a basement suite, a new roof or an addition: borrowing against your home usually costs far less than cards or personal loans. Here are the ways to fund it.
You've started an application.
Saves as you go · No credit check · A licensed mortgage professional follows up
1Renovations are often financed with a HELOC, a refinance or a second mortgage, because secured rates are well below credit card or personal loan rates.
2Some lenders will lend against the value of the home after the work is done, so you may borrow more than today equity alone.
3Staged projects often suit a HELOC, since you borrow as each invoice comes in. A one-time project may suit a refinance.
4Plan for the unexpected: build a buffer of 10 to 20 percent into your budget.
Get ready
What lenders will ask you for
Contractor quotes or a detailed budget
Building permits, if the work needs them
Your current mortgage statement and property tax bill
Proof of income: pay stubs and T4s, or Notices of Assessment
Photo ID and proof of home insurance
Your options
Which kind of lender fits you
Option 1
HELOC
Draw funds as invoices come in and pay interest on what you use. Good for staged work.
Option 2
Refinance
Roll the renovation budget into your mortgage for a single payment. Check any penalty first.
Option 3
Purchase plus improvements
Buying a home that needs work? Some lenders add the renovation money to the mortgage and release it as work is completed.
Option 4
Second mortgage
Keeps your first mortgage as it is. Higher rate, shorter term.
Avoid these
Common mistakes
!Starting work before the financing is arranged.
!Underestimating the budget and having no buffer.
!Skipping permits, which can cause problems when you refinance or sell.
!Borrowing more than the project adds to the value or enjoyment of the home.
Take action
Your first steps
1Get at least two written quotes.
2Check whether the work needs a building permit.
3Estimate your home value, today and after the work.
4Gather your income documents.
5Start the intake so a broker can match the right route to your project timing.
The intake
What your application will ask
Your online application goes one topic at a time and saves every answer and document as you go, so you can stop and come back. It never runs a credit check, and a licensed mortgage professional reviews it and follows up.
For home renovations borrowers
What are you planning to renovate, and what is the estimated cost?
When does the work start, and will it be paid in stages?
What is your estimated home value and current mortgage balance?
Do you already have contractor quotes or permits?
What is your approximate household income and how is it earned?
What monthly debt payments do you have today?
Is any part of the project a rental suite or garden suite?
Plus the basics everyone answers 13
Your full name, email, mobile number and the best time to call.
The city you live in, and whether you are a Canadian citizen, permanent resident, or other status.
Are you applying alone or with someone else? If with someone, their name and how you are related.
Your goal: buy, refinance, renew, take out equity, or consolidate debt?
The property type (house, condo, multi-unit) and the city it is in.
Will you live in it, rent it out, or both?
The purchase price or estimated value, and your target closing or renewal date.
Your down payment or available equity, and where it comes from (savings, RRSP/FHSA, a gift, sale of another property).
Your approximate yearly household income before tax.
Your monthly debt payments: car loans, credit cards, lines of credit, student loans, support payments.
Your own estimate of your credit score: excellent, good, fair, poor, or not sure.
In the last 7 years, any bankruptcy, consumer proposal, collections, or missed mortgage payments?
May the broker contact you? (A credit check is only ever run later, with your separate written consent.)
Scroll for more
Answers
Questions people ask
What is the cheapest way to finance a renovation?
Usually a HELOC, refinance or second mortgage using your home equity. They cost less than credit cards and most personal loans.
Can I borrow based on my home value after the renovation?
Some lenders and programs do, using an as-improved appraisal. Availability and limits vary by lender.
Is a HELOC or refinance better for renovations?
A HELOC fits staged projects and uncertain costs. A refinance fits a single defined budget and a preference for one predictable payment.
Do I need permits to get financing?
Lenders may ask for permits for larger work such as additions or basement suites. Permits also protect you when you sell or refinance later.
Can I finance a rental or garden suite?
Often yes, and rental income may help you qualify. Ask us about the rules for your municipality and lender.
Does starting the intake affect my credit?
No. The intake is just questions. A credit check is only done later, with your separate permission.
General information, not mortgage, legal or tax advice. Lender rules change and every application is reviewed on its own facts. Your application and documents are stored privately and go only to a licensed mortgage professional at Top Mortgages Inc; they are never sold, and no credit check is run without your separate written consent.