Mortgage Refinance

Accessing Home Equity to Finance a Home Reno

calendarApril 12, 2017

peopleThe Mortgage Advisors

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Do you want to add an ensuite? Finish the basement? Give the kitchen a makeover? A home renovation is an excellent way to increase the functionality of your home while also giving a boost to its value, but most homeowners don’t have cash on hand to pay for upgrades out of pocket. That doesn’t mean you need to tear up the blueprints, though. There are ways use you can use your home equity to help finance a new renovation project. Let’s explore the options to finance that brand new kitchen you’ve been dreaming of!

Mortgage Refinancing

You can refinance your mortgage and fold in the cost of home renovations. The main advantage is that you can repay the cost of renovations over a long time period and at mortgage interest rates, which are far more favourable than credit card and personal loan rates. You can borrow up to 80% of the appraisal value of your home, less any outstanding balance on your current mortgage. Sender lenders offer Refinance Plus Improvements allowing you to finance based on the improved value of the property.


Home Equity Line of Credit (HELOC) is another decent option for home projects. It’s like having a second mortgage since the collateral is also against your home. The way it works is that the lender agrees to a maximum credit limit where you can borrow and re-borrow as you need. Plus, HELOCs have lower interest rates than many other options, and you only pay the interest on the amount you use.

Unregistered Line of Credit

If you don’t have enough equity to add a HELOC, then you can try an unsecured line of credit. They may come with higher rates than a HELOC but they are a favourable option as you can also borrow and re-borrow against the total amount as you like. Plus, many banks offer rates much better than credit cards and personal loans.

Credit Lender Beware

For most of us, credit cards have become one of our essential everyday financial tools. But when it comes to renovation projects, taking out large amounts of money on a credit card can be risky. In any case, it should only be done if you have the discipline and are certain you have the funds to pay it back and quickly. It may be wise to otherwise take out a fixed-rate mortgage in today’s market, which will lock in a low rate and allow for controlled payments. Making quality home improvements is a great way to boost your home’s value, improve your living conditions, and make your home more efficient. An experienced mortgage professional can help you to find the financing you need to undertake those renovations.
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