Use Home Equity for Renovations in 2025
our home is more than a place to live — it’s a powerful financial asset. In 2025, with mortgage rates gradually stabilizing, many Canadian homeowners are unlocking home equity to fund major renovations. Whether you’re modernizing your kitchen, finishing your basement, or adding a rental suite, using your home’s built-up value smartly can boost property worth and improve comfort without draining savings.
Here are the top 3 ways to use home equity for renovations this year.
1️⃣ Home Equity Line of Credit (HELOC)
A HELOC gives you flexible access to your home’s equity, similar to a credit card but with much lower interest rates.
Why it’s great for renovations:
You borrow only what you need, when you need it.
Interest-only payments during the draw period help manage cash flow.
Perfect for ongoing or multi-stage renovation projects.
Example: If you’re planning multiple upgrades — say, roofing this summer and landscaping next spring — a HELOC lets you draw funds in phases.
2️⃣ Mortgage Refinancing
Refinancing means replacing your existing mortgage with a new one, often at a better rate or for a higher amount, allowing you to access your home equity as cash.
Why it works in 2025:
With rate cuts anticipated later in the year, locking in a lower fixed rate now could save thousands.
Great for large-scale projects like home additions, major remodels, or basement conversions.
May allow consolidation of renovation costs and existing debt into one manageable payment.
💡 Tip: Use up to 80% of your home’s appraised value (minus your remaining mortgage balance) when refinancing.
3️⃣ Home Equity Loan (Second Mortgage)
A home equity loan, often called a second mortgage, provides a lump-sum amount secured against your property.
Why homeowners choose it:
Fixed interest rate and predictable payments.
Ideal for one-time renovation projects with clear budgets.
Faster approval and funding through private or alternative lenders.
Example: A second mortgage of $75,000 could fully fund a kitchen renovation that increases your home’s resale value by $100,000+.
