As Canadians increasingly embark on home renovation projects, many are turning to various financing options to make their dream homes a reality. With loan providers such as Fig and financial products like Home Equity Lines of Credit (HELOCs), homeowners have several avenues to fund their renovations. Experts suggest that these projects can significantly increase property value, making them a strategic investment rather than a mere expenditure.
In 2024, the average loan size for home improvement projects reached $8,129 per consumer, according to Humm Canada. This trend underscores the growing reliance on financing to manage both expected and unexpected costs associated with renovations. Harpreet Singh, for example, utilized a HELOC to finance his basement conversion, citing rental income as a justification for his investment.
“When your property is giving you a rental income, that is something where you can justify using financing to renovate the basement because you have income coming in,” – Singh
HELOCs offer more flexibility compared to using savings, allowing homeowners to manage their cash flow more effectively. However, financial expert Cote emphasizes the importance of assessing one's financial stability before committing to such investments.
“If there’s instability and you would find yourself unable to make your payment obligation, that would put you in a bad spot,” – Cote
Humm Canada plays a pivotal role in supporting homeowners by providing loans of up to $30,000 for substantial home improvement expenses. Customers have five years to repay their loans, with partnerships with home improvement retailers helping to ease the financial burden through shared interest on loans.
“Planning ahead and thinking about what you need from a budget perspective is probably one of the most important things because you’re always off-budget,” – Cote
While financing a renovation is an appealing option, homeowners must carefully evaluate the potential payoff of their investment. Projects that add value to the property are more likely to yield a return when selling the house. Singh cautions against spending on non-essential renovations that might not offer financial benefits.
“Because if it’s not adding value to the property, and they’re not going to get that money back when they’re looking to sell their house, it might not be worth it.” – Singh
Home renovations should be viewed as long-term investments rather than short-term indulgences. Moulton highlights the lasting impact such projects have on both property value and quality of life.
“House renovations are part of something that, over a long period of time, pays off,” – Moulton
