Financing a renovation in Ontario, ranked from cheapest to most dangerous

The ranking, plainly

1. Savings. No interest, no setup, no counterparty. CMHC's own consumer guidance puts it first for a reason.
2. Secured line of credit or home-equity loan. Preferred rates because the house backs it; budget for setup and legal fees. A HELOC is generally capped at 65 percent of your home's value, and your mortgage plus HELOC together cannot exceed 80 percent, per federal guidance for regulated lenders.
3. Mortgage refinancing. Often the best rate on large scopes; comes with setup costs and, mid-term, potential penalties.
4. Personal line of credit or personal loan. Unsecured, faster, costlier; loans typically run one-to-five-year repayments.
5. Credit cards. CMHC notes interest can reach 18 percent. Emergency-only territory for construction sums.

The special case: building a rental suite

If the project is a secondary suite, CMHC's insured refinancing programme changes the math entirely: up to 90 percent loan-to-value on owner-occupied properties worth under $2 million, up to four units, 30-year amortization, minimum credit score 600. The conditions are real: the suite must be self-contained and by-law compliant, no short-term rentals (90-day minimum leases), and the funds must go to construction, not equity take-out. Pair that with Hamilton's grant of up to $40,000 per ADU and a suite project can carry remarkably little of your own cash. The build requirements themselves live in the legal-suite rules.

"I do not sell financing, and that is deliberate. The contractor who arranges your loan has two incentives pulling the same direction: a bigger scope and a faster signature. Bring your own money from your own lender, and every incentive at the table straightens out."

Mitch Fraser, owner, Ontario Contracting Co.

Contractor-arranged financing: the caution that survived the NOSI ban

Ontario banned Notices of Security Interest on consumer goods effective June 6, 2024 (Homeowner Protection Act, 2024), ending the practice of registering liens on title for financed furnaces and water heaters, with existing consumer-goods NOSIs deemed expired. Understand what did not change: the underlying debt survives. Financiers keep their security interests, the contracts still bind you, and collection through the courts or PPSA seizure remains available. If a contractor offers to arrange the money, read the financing contract as carefully as the construction one, and remember an $8 PPSA search shows what is registered against the contractor themselves.

Rebates and credits shrink the number before you borrow it

Before sizing a loan, subtract what programmes will pay: Ontario's live energy rebates (up to $7,700 insulation, $7,500 heat pumps), the municipal flood grants in Brantford and Hamilton, and the federal credits at tax time. Financing the gross number instead of the net one is a quiet, common overborrow.