Using Home Equity for Renovations in Ontario

Kitchen from 1998? Basement that’s just storage? If your home needs work, your home itself can pay for it. Using home equity for renovations is one of the most popular reasons Ontario homeowners refinance — and it can actually increase your home’s value at the same time.

Why Use Home Equity for Renovations?

  • Lower borrowing cost — mortgage rates are typically far below credit cards or unsecured loans
  • Bigger budgets — access tens of thousands based on your equity, not your credit limit
  • Value-adding — the right renovations raise your home’s value, growing your equity further
  • One payment — especially with a refinance, everything rolls into a single mortgage payment

How Much Can You Borrow?

Ontario’s 80% rule: you can generally borrow up to 80% of your home’s appraised value, minus your current mortgage balance.

Example: home worth $800,000, mortgage balance $450,000. 80% of $800,000 = $640,000. Minus $450,000 owed = up to $190,000 available for renovations.

Three Ways to Fund Renovations With Equity

1. Refinance (equity takeout)

Replace your mortgage with a larger one and take cash for the reno. Best when: you want one payment, or your current rate isn’t worth protecting. Learn more about equity takeout.

2. Second mortgage

A separate loan on top of your existing mortgage. Best when: your current mortgage has a great rate you don’t want to break, or you need funds fast.

3. HELOC

A revolving line of credit against your home. Best when: renovation costs will come in stages and you want to draw as needed. Compare all three options.

Which Renovations Are Worth It?

Renovations with the strongest return in the Ontario market tend to be kitchens, bathrooms, finished basements, and energy upgrades (windows, insulation, heat pumps). Cosmetic updates are cheaper but add less value. Structural or layout changes cost more but can transform how your home lives — and appraises.

A note of caution: don’t over-renovate past your neighbourhood’s ceiling. We can talk through whether your reno budget makes sense for your home’s value.

Can You Borrow Based on the Future Value?

Some renovation programs let you borrow against your home’s after-renovation value. Availability depends on the lender and the scope of work — ask us what’s possible for your project.

Frequently Asked Questions

Do I need quotes from contractors first?

It helps. Lenders like to see what the money is for, and detailed quotes strengthen your application — especially for larger amounts.

What if I don’t have 20% equity yet?

The 80% rule still applies to most equity lending. If you’re close, a smaller project funded another way now could build the value you need later.

Is the interest tax-deductible?

Generally no, for personal residences in Canada. If part of your home is a rental or business space, talk to an accountant about your specific situation.

How fast can I get the funds?

Typically 2–4 weeks from a complete application. Second mortgages and private options can be faster.

ABC Mortgages — Mortgage Broker in Pickering, Ontario. Principal Broker Lic. #M13001328.

Planning a renovation? Apply now or call 647-627-8648 (direct) / 1-800-820-5188 (toll-free). Free consultation — we’ll help you figure out the smartest way to fund it.

Related: Equity Takeout & Second Mortgages · Second Mortgages in Ontario · HELOC vs Second Mortgage vs Refinance