What Are My Financing Options for Home Renos?

BonnieFinancing, Home Renovations

Image of renovated and original room

We have all spent a lot of times in our homes over the last couple of years, and all that time indoors has resulted in a lot of home renos. We also know the housing market in Canada has never been hotter, and home renos go hand in hand with a housing boom. Whether you are getting your house ready to list, or if it’s just time to do some renos to update your home, one thing is for certain: it’s going to cost you some cash.

Before you take a sledgehammer to the kitchen, it’s a good idea to get a realistic idea of what it’s going to cost to do the scope of renos you dream of. One thing most people find is that renos often cost more money and time than they hope. By the time you factor in the prices of supplies, contractors, and the time it will take, you may need to adjust your plan. 

We aren’t saying this to prevent you from doing those renos, just to go in with a smart, achievable plan. And since not everyone has a home reno fund just waiting to be spent, so what are the financing options available if you want to do some major home renovations? 

Here are a few of the most common options to finance your home reno.

Use Your Home Equity

Home equity is the difference between what you currently owe on your mortgage and the current value of your home. Using home equity is an option that people might take, especially if the home renos are going to be costly. Using home equity is a great option for people because it gives you the money you need at lower rates than a loan from a bank. And since the value of your home has likely increased over the last few years, you might find you can borrow against some of that equity at today’s low interest rates.

Get a Line of Credit

A line of credit is a good option if you plan to slowly chip away at the renos over time and aren’t eager to get them finished all at once. With this financing option, you don’t pay interest on funds you aren’t immediately using, but you will have access to the money as you need it. Do know that an unsecured line of credit will likely come with a higher interest rate than a secured line of credit, but if you have good credit you will be able to get the money quickly.

Borrow From Family or Friends

Like all options, this one has some benefits and pitfalls. Borrowing from someone you know probably has a low interest rate, but it can put relationships on the line if things go awry in the paying back phase of the transaction. This option should be weighed carefully because the long-term effects from the lender to the borrower may have a lot of hidden costs. For example, if parents are financing an expensive reno, this may delay their retirement or put them in a position where their own comforts are impacted. 


For various reasons, sometimes loans are not an option and renos have to saved up for and paid with money out of pocket. In fact, for some people, it’s not worth going into debt to fix up a home, especially if you’re not in a rush to do the renos. This option can be fun, too, because it can give you the time to take a more DIY approach and learn some skills along the way.

What’s Next?

There are a lot of things to consider if you are thinking about a house renovation – whether it’s a basement suite renovation or a full sweep home reno. One of the best questions to ask is “what will add equity to my home” and prioritize those renovations first. If there are really pressing issues like you need a new roof or updating your windows, those types of renos are important because they will start saving you money the sooner you do them.

Sometimes a nice and easy home reno like a fresh coat of paint or DIY upgrades can scratch that home reno itch while you get your finances in order. Just make sure you have a plan in place before you start knocking down walls!