HELOC (home equity line of credit)
A revolving line registered behind your existing mortgage. You're approved for a limit, then draw only what you actually spend. Rates are variable, typically prime + 0.50%, and the minimum payment is interest-only.
Where it wins
- +Draw in stages as trades invoice — you pay interest only on what's used
- +Leaves a low existing mortgage rate completely untouched
- +Repay and re-borrow with no penalty; ideal if the budget is uncertain
- +Setup usually $0–$1,100 (legal/appraisal), no mortgage penalty
Where it costs you
- −Variable — payments move every time prime moves
- −Interest-only means the balance never disappears on its own
- −Revolving portion capped at 65% of home value
- −Rate is roughly 1.5–2% higher than a good mortgage rate
Best fit: Phased renovations, unpredictable budgets, and anyone mid-term on a rate worth protecting.
Refinance (mid-term equity take-out)
You break the current mortgage and rewrite it for a larger amount, with the renovation money advanced at closing. One payment, one rate, amortized up to 30 years on an uninsured refinance.
Where it wins
- +Lowest rate of any secured option — full mortgage pricing
- +One consolidated payment; the debt actually amortizes away
- +Chance to consolidate other high-interest debt at the same time
- +Amortization can be extended to 30 years to protect cash flow
Where it costs you
- −Prepayment penalty: IRD on a fixed mortgage, ~3 months' interest on a variable
- −Legal, appraisal and admin costs of roughly $1,000–$1,800
- −Re-amortizing resets the clock — more total interest over your lifetime
- −Hard capped at 80% loan-to-value, and you must re-qualify at the stress-test rate
Best fit: Large single-stage renovations, or when you also want to clear consumer debt in one move.
Renewal take-out
The same as a refinance, timed to your maturity date. Because the term is ending, there is no prepayment penalty — you simply move to a new lender (or stay) at a higher amount.
Where it wins
- +No prepayment penalty — often the single biggest saving available
- +Full market shopping across lenders at the same time
- +Same 80% ceiling and mortgage-rate pricing as a refinance
Where it costs you
- −Only works if your renewal is close — we start the file 4–6 months out
- −Still requires full re-qualification and an appraisal
- −Legal costs still apply if you switch lenders with an increase
Best fit: Anyone within about six months of maturity. Wait for it if you possibly can.
Purchase plus improvements
Buying a home that needs work? Lenders will advance up to about 20% of the purchase price (commonly to a $40,000 cap) for improvements, based on the post-renovation value — with as little as 5% down.
Where it wins
- +Renovation is financed at mortgage rates from day one
- +Available on insured, low-down-payment purchases
- +Lets you buy the dated house in the better location
Where it costs you
- −Funds are held by the lawyer and released only after work is complete and inspected
- −You must cover the renovation cost up front, then get reimbursed
- −Quotes must be submitted and approved before closing
Best fit: Buyers taking on a dated but well-located home in Surrey, White Rock or Langley.
Reverse mortgage (55+)
For homeowners 55 and older: tax-free equity with no required monthly payments. The balance grows and is repaid when the home is sold or the last borrower leaves.
Where it wins
- +No monthly payments — protects a fixed retirement income
- +No income or credit qualification in the usual sense
- +Funds are tax-free and don't affect OAS or CPP
Where it costs you
- −Rates are meaningfully higher than a mortgage or HELOC
- −Compounding interest erodes the estate if nothing is paid voluntarily
- −Setup costs around $1,795–$2,995
Best fit: Retirees renovating to age in place who don't want a new monthly payment.
What we'd usually avoid
Contractor financing and unsecured lines sit anywhere from 9% to 20%. They're fast and need no equity, but on a $100,000 project the difference against a secured option is tens of thousands of dollars over five years. If equity exists, use it. Run both sides on the calculator.
