Home Renovation Financing in Toronto & Ontario

Three honest paths exist for financing a renovation through your mortgage, and the right one depends on whether you already own the home, how much you need, and how you'd react to a 12-month delay. I walk every client through all three before we pick. The wrong choice on a renovation refinance can lock you into a higher rate or a higher penalty than you needed.

Leah's take, from the press

I weighed in for the Financial Post on how renewal-time refinances are presenting unexpected challenges for borrowers who counted on the equity for renovations. The lesson: if you're planning a major reno, structure the refinance around the renewal date, not the project date. Most homeowners don't realize the difference until it costs them.

Option 1: Purchase Plus Improvements

Buying a home that needs work? You can roll the renovation budget into your mortgage at purchase, meaning you finance the home AND the renovations in one shot, at mortgage rates, with as little as 5% down on the total.

How it works:

Get quotes for the specific renovations you plan to do
We submit the purchase with quotes attached; lender approves based on the post-renovation value
You close, move in, and do the work within a set timeframe (usually 90-120 days)
Once renovations are complete and inspected, the renovation funds are released to you

Great for

Fixer-uppers, dated kitchens/bathrooms, essential updates (roof, furnace), accessibility modifications, or finished basements. Maximum renovation budget is typically 10-20% of the purchase price.

Option 2: Refinance for Renovation

Already own your home? Refinance up to 80% of the current value, pull out cash for the renovation, and fold the new, larger mortgage back into a single payment.

When this wins:

Large renovation budgets ($50,000+)
You want a predictable monthly payment rather than a variable line of credit
Rates are favorable and a refinance will also improve your interest rate

Option 3: HELOC (Home Equity Line of Credit)

A HELOC is a revolving credit line secured by your home. You get approved for a limit, and you draw on it as needed, paying interest only on what you use.

When this wins:

You're doing the work in phases and only need money at certain points
You want flexibility to draw or pay down repeatedly
The renovation budget is uncertain or may change

HELOCs typically run at prime + 0.5% (higher than a mortgage but lower than any unsecured credit), with interest-only minimum payments.

The mistake most people make

Putting a major renovation on credit cards or an unsecured line of credit. A $40,000 kitchen at 19% credit card interest costs about $7,600 in annual interest; the same $40,000 refinanced into a mortgage at 5% costs about $2,000. Over a multi-year renovation payoff, the savings are massive.

Which option fits your project?

Scenario	Best Fit
Buying a fixer-upper	Purchase Plus Improvements
Major renovation ($75k+), existing home	Refinance
Phased renovation over years	HELOC
Small improvements under $25k	HELOC or line of credit
Locked in low rate, don't want to break mortgage	HELOC (added to existing mortgage)

Frequently Asked Questions

Do I need to show specific renovation plans?

For Purchase Plus Improvements, yes. The lender needs contractor quotes so they can value the home post-renovation. For refinance or HELOC, no. You can use the funds for anything once approved.

Can I do the renovation myself?

For Purchase Plus Improvements, most lenders require licensed contractors for major work (plumbing, electrical, structural). Cosmetic work (painting, flooring, tile) is usually DIY-friendly. For refinance or HELOC, you can do whatever you want.

Will renovations increase my home's value enough to offset the cost?

Sometimes. Kitchens and bathrooms typically return 60-80% of cost at resale. Finished basements return 50-70%. Pools and high-end custom features often return less. But that's resale math. If you're renovating for your own enjoyment over many years, the value calculation is different.

What if my renovation goes over budget?

Always build in a 10-15% contingency. With Purchase Plus Improvements, if you go over your approved budget, you'll need to cover the overage out of pocket. With a HELOC, you can draw more as needed (up to your credit limit).

Plan the financing before you start the project

The biggest renovation mistakes I see come from people who signed the contractor first and asked about financing later. Bring me your quotes before you sign anything. We'll structure the financing in the way that saves you the most money over the life of the loan, not just the first month.

Local and remote mortgage help

My office is in North York, and most of my closest local work is across the north GTA. I also work with clients across Toronto, Ontario, and the other provinces where I'm licensed. See the areas served page for the full service-area map.

These are educational estimates. Lender criteria, government program limits, insurance premiums, and qualifying rules all change. For an accurate quote for your situation, start your application now and I'll come back to you with real numbers from real lenders within a business day.

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Finance the renovation, not the regret

Free consultation. I'll tell you which option fits your project, your timeline, and your existing mortgage.

Get Renovation Financing Call (416) 567-2552