Renovations: choose the source of funds before work starts

Savings: no new interest, but your reserve shrinks. A line of credit: flexible, at a variable rate. Refinancing: good for a bigger amount, with fees and a new amortization attached.

• Quotes with taxes and exclusions spelled out
• The schedule of deposits and draws
• A reserve for what you find behind the walls

$60,000 of work: kitchen, bathroom, windows, over four months, with a $15,000 deposit at contract signing. Three options. Savings: no interest, but the reserve falls to zero. A home equity line at 6.5%: funds available the same day, interest only on what is drawn, about $325 a month fully drawn, and nothing forces principal repayment. A refinance at 5% over 20 years: about $395 a month, principal included, but $4,000 of penalty and fees, and the money arrives after the appraisal and the notary, three to five weeks, too late for the deposit. Often the answer is a mix: savings for the deposit, the line for the draws, then a refinance at renewal to consolidate at a fixed rate.

If you are buying the property at the same time as planning the work, the purchase plus improvements program finances the work at the mortgage rate within the same transaction, with its own draw rules. For emergency work, a leaking roof, a cracking foundation, the calendar leaves no time to refinance: the line of credit or savings are the only realistic options, and the refinance comes afterwards. Finally, work that adds no value to the property is financed like any other expense: the lender will not view it as an investment.

When the work is financed by the mortgage, the money does not land in your account all at once. The lender holds back the renovation portion at the notary and releases it in stages, on proof of progress: invoices, photos, sometimes an appraiser’s visit confirming that the percentage completed matches the amount requested. A first advance often comes at 30 or 50% completion, the rest at the end, after a final inspection. This mechanism protects the lender, but it forces you to front the first payments to the contractor: that is where the need for a temporary source, savings or a line of credit, comes from. Quotes must describe work that adds recognized value, not furniture or decoration, and extras decided along the way are not covered. Before signing with the contractor, have the lender read the quotes: what is not eligible is known then, not at the first advance.

Frame the refinancing that will pay for the work

FCAC — Borrowing on home equity. Reviewed August 12, 2026.