Cash
You can start saving some amount of money separately as an emergency fund to finance immediate home improvements after closing. It can be done as soon as you start taking decision to buy your own house along with savings for your down payment.
Low or Zero Interest Card
Lot of financial institution offers low interest or 0 interest cards. Promotional period for the low interest normally offered in financial institution is for 6-12 months. Interest rates on the open credit goes higher after the promotional period. It is a good choice for small home improvements like kitchen remodelling, painting, Washroom updates, replacing lighting fixtures, etc. It is a low-cost option and no closing cost but to be used with the caution that you are able to repay with in Interest promotion period.
Unsecured Line of Credit
You need to discuss with banks, unions or other lenders for personal line of credit. It doesn’t need any collateral and get quicker approvals. You will be offered better interest rates and longer repayment period compared to the credit cards. Approval on the amount and interest depend on your income, credit score and open credit. It also has a benefit of no closing cost and can closed anytime. This is a good option for medium size projects between $10,000 go $50,000.
Home Equity Line of Credit (HELOC)
A HELOC is another way to borrow against the value of your home. You get a line of credit — usually up to 80% of your home’s value, minus the amount of your home loan. HELOCs come with a draw period and repayment period. During the draw period, which often lasts about 10 years, you can spend the money in your credit line. Your monthly payments would cover mostly the interest and a little bit of the principal on any outstanding balance. During the repayment period, which typically lasts around 15 years, your monthly payments would probably be higher because they’d include more principal. This is a good option for the improvement project greater than $50,000.
Mortgage Refinance
You financed your home for few years ago. Value of the property appreciated over the time and you now looking for much bigger renovation. You also find out the interest rate on your mortgage is higher compare to the current mortgage interest rate. It will be a good option to refinance your mortgage to reduce your monthly payments and finance your dream renovations for your house. You can consider a cash-out refinance to tap some of your home’s equity. Lenders will generally let you borrow enough to pay off your current mortgage and take out more cash, usually up to 80% of your home’s value. Consider this option if home renovation increasing the value of your home and Cash-out finance option will use your house as a collateral.
Financing upon home purchase
Talk to your mortgage advisor If you’re planning major renovations to a home you’re about to buy, think about adding the cost to your mortgage. You’ll pay a lower interest rate than with a credit card or line of credits.
There are few programs offered by Federal, provincial and municipal governments and local utilities may offer grants and rebates for energy-saving renovations. It is worth to explore what are those based on your new home location. For example, CMHC Green Home offers a premium refund of up to 25%. You may be eligible if you buy, build or renovate for energy efficiency using CMHC-insured financing.