How to Finance a Renovation in Ontario
The main ways GTA homeowners pay for renovation work, what each one suits, and the federal credit most people building an in-law suite do not realise they qualify for.
Very few renovations are paid for entirely in cash, and the way a project is financed often shapes its scope more than the design does. Most GTA homeowners draw on home equity, because it is usually the cheapest money available to them — but the right structure depends on whether your costs are known upfront or will evolve as the work goes.
The overview below is general information to help you ask better questions, not financial advice. Rates, lending rules and program availability change; confirm anything here with your lender, mortgage broker or accountant before you commit.
Home equity line of credit
A revolving line secured against your home, typically at or near prime. Federally regulated lenders cap the revolving portion at 65 per cent of your home’s value, with total secured borrowing — mortgage plus line — capped at 80 per cent.
Suits: projects where costs evolve, or work done in phases. You draw only what you need when you need it, and can repay without penalty.
Mortgage refinance
Replacing your existing mortgage with a larger one and taking the difference in cash, generally available up to 80 per cent of the property value.
Suits: large, well-defined projects, and works best when your mortgage is approaching renewal anyway so you avoid a breakage penalty. Usually the lowest rate of the options here.
Purchase Plus Improvements
A CMHC-backed option that lets you roll renovation costs into the mortgage when you buy, based on quotes provided at the time of purchase.
Suits: buying a property that needs work. Often the cleanest way to take on a fixer-upper, since the renovation is financed at mortgage rates from day one.
Secondary suite financing
CMHC has specific provisions for homeowners adding a self-contained secondary unit — a basement suite, in-law apartment or garden suite — which can allow refinancing against the improved value rather than the current one.
Suits: income-generating projects. See our detailed guide and the returns comparison.
Unsecured renovation loans
A personal or contractor-arranged loan not secured against the property. Rates are higher than equity-backed options, sometimes considerably.
Suits: smaller projects, homeowners without much equity, or work that needs to start before a refinance can complete.
Cash and staged budgets
Paying as you go, often by breaking a larger plan into phases across multiple years — bathroom this year, kitchen the next.
Suits: anyone who would rather not borrow. Worth planning the phases together even if you build them apart, so later work does not undo earlier work.
Credits and rebates worth checking
Programs change and several recent ones have ended. These are the two most relevant to renovation work as of this writing — verify current status before relying on either.
Multigenerational Home Renovation Tax Credit
A federal refundable credit for creating a self-contained secondary unit to house a senior, or an adult eligible for the disability tax credit, who is a qualifying relative. It covers 14.5 per cent of up to $50,000 in qualifying expenditures, to a maximum credit of $7,250 per qualifying renovation.
The unit has to be genuinely self-contained — separate entrance, kitchen, bathroom and sleeping area. Timing rules matter, so check eligibility with your accountant before work begins rather than at tax time. Figures per the Canada Revenue Agency, Line 45355.
Energy efficiency rebates
Ontario’s Home Renovation Savings Program, delivered through Save on Energy with Enbridge Gas, offers rebates on energy-related upgrades including insulation, windows and doors, heat pumps, smart thermostats and solar.
Two things routinely cost homeowners the rebate: funding windows close without much notice, and for the bundled stream a pre-retrofit assessment must be completed before any work begins. Confirm current eligibility and sequencing directly with the program before you start.
How this affects your project with us
What we provide
- An itemised written estimate suitable for a lender or program application
- Scope documented clearly enough to support a Purchase Plus Improvements or secondary-suite application
- Realistic costs, so your financing is sized against the actual project
- Staged pricing where you want to phase the work across budget years
What we do not do
- Provide financial, mortgage or tax advice — that is your broker or accountant
- Arrange or broker lending on your behalf
- Guarantee eligibility for any credit or rebate program
- Recommend starting work before a rebate’s required assessment is done
Financing questions
What is the cheapest way to finance a renovation?
For most homeowners with equity, a mortgage refinance carries the lowest rate, followed by a home equity line of credit. Unsecured loans cost more. Which is actually best depends on how much equity you have, where you are in your mortgage term and whether breaking early would trigger a penalty.
Can I borrow against my home for renovations?
Generally yes. Federally regulated lenders allow total secured borrowing up to 80 per cent of the property value, with any revolving line of credit portion capped at 65 per cent. Your available room is that limit minus your current mortgage balance.
Is there a tax credit for building an in-law suite?
Yes. The federal Multigenerational Home Renovation Tax Credit covers 14.5 per cent of up to $50,000 in qualifying expenditures, to a maximum of $7,250, when you create a self-contained suite for a qualifying senior or disability-tax-credit-eligible relative. Eligibility and timing rules apply, so confirm with your accountant before starting.
Can renovation costs be added to a mortgage when buying?
Yes, through a Purchase Plus Improvements arrangement, which finances the work as part of the purchase based on contractor quotes provided at the time. It is often the most cost-effective route for a property that needs work.
Do you offer financing directly?
No. We provide a clear itemised estimate you can take to a lender, broker or program application, but we do not arrange lending or give financial advice. Keeping those separate is better for you — a contractor should not also be the one telling you how much to borrow.
Related reading
Financing usually comes down to what you are building and what it will be worth. These pages cover both sides.
Start with a real number
An itemised estimate is the first thing a lender or rebate program will ask for. Ours is free, detailed and carries no obligation.
Start with a real number
An itemised estimate is the first thing any lender or rebate program will ask for. Ours is free, detailed and carries no obligation.
Get a Free Quote