How to finance your residential expansion projects in Quebec?

Renovating your home is an exciting adventure, whether it's updating an aging kitchen, adding a room to accommodate a new child, making your home more energy-efficient, or simply increasing its resale value. These projects, whether small or large, often require significant investments.

Fortunately, financing options are numerous and accessible. Today, whether you're planning a simple renovation or a complete transformation of your property, there are solutions adapted to every profile and every project. This guide offers a clear, comprehensive, and up-to-date overview of the different ways to finance your residential expansion project in Quebec, as well as some practical advice to avoid common pitfalls and get off to a good start.

Before you start: talk budget with the right partners

Even before choosing the colors for your walls or the materials for your future deck, it's essential to accurately assess your financial capacity. This requires an in-depth discussion with your financial advisor or lender, who can help you better understand the available financing solutions, develop a realistic plan, and determine the maximum amount you can borrow without compromising your financial stability.

This step also allows you to obtain credit pre-approval, if necessary, which will help you plan more effectively and negotiate with contractors or suppliers with greater confidence.

What is your budget?

The main financing options

1) Use your savings

If your renovations are minor, such as painting, buying new light fixtures, or replacing flooring, it may be a good idea to pay cash using your personal savings. This approach has the advantage of avoiding interest charges, simplifying the process, and not increasing your debt. This is a good option if you already have money saved or are doing the work yourself to reduce costs.

Use your savings

2) Credit card: convenient, but use with caution

Credit cards can be useful for financing one-off purchases or urgent projects, provided you can pay off the balance quickly. The main drawback remains the high interest rate, often over 18%, which can make the final cost of your project much higher than expected. If you choose this option, make sure you have a very clear repayment plan to avoid accumulating long-term debt.

Your payment options

3) Personal loan

A personal loan is a flexible option for financing medium-sized renovations. You borrow a set amount and repay it over a fixed period, usually between one and five years.

This type of loan offers the advantage of a lower interest rate than credit cards, with the option to choose between a fixed rate, which offers stability, and a variable rate, which is often lower but less predictable. Once the loan is repaid, you'll need to reapply if you need new financing, which may require a reassessment of your application.

Meet professionals to help you

4) The personal line of credit

Often used for projects spread out over time, a personal line of credit gives you access to a sum of money that you can use in whole or in part as your project progresses. You only pay interest on the amounts used, making it an economical solution for gradual renovations.

You receive a monthly statement that allows you to track your expenses, and you can reuse the repaid funds at any time without reapplying. This flexibility makes it a particularly popular option for multi-phase projects or when final costs are uncertain.

5) Secured line of credit or home equity loan

These financing products are backed by the equity you've built up in your home. In other words, the more you've paid off your mortgage, the more leeway you have to borrow at competitive rates. Secured lines of credit and equity loans allow you to obtain large sums at low interest rates, but they also involve upfront costs such as notary fees, appraisal fees, and inspection fees. Generally, the total loan amount cannot exceed 80% of your property's current value.

What is the warranty?

6) Mortgage refinancing

If you're planning a major renovation, such as an addition or a complete kitchen or bathroom remodel, refinancing your mortgage can be beneficial. By refinancing your mortgage, you can borrow more at a rate that's often lower than consumer loans. This option also allows you to spread the repayments over a longer period. However, it comes with closing costs, including legal and appraisal costs, and should be considered a medium- to long-term financial decision.

7) Adding Renovations When Buying a Home

Si vous achetez une propriété qui nécessite des rénovations, vous pouvez regrouper le coût des travaux dans votre financement hypothécaire. C’est une stratégie intelligente pour éviter d’avoir à contracter un prêt séparé. Grâce à l’assurance prêt hypothécaire de la SCHL, vous pourriez financer jusqu’à 95 % de la valeur de la maison une fois les rénovations complétées, avec une mise de fonds minimale de seulement 5 %. Cette solution est particulièrement intéressante pour les premiers acheteurs ou ceux qui veulent rénover dès l’achat.

Ask yourself questions about your project

Not to be forgotten

1) Plan a cushion for unforeseen events

No matter how thorough your planning, surprises are always possible. Missing materials, changes to plans mid-stream, unexpected discoveries behind a wall or under a floor: all of these elements can quickly increase the cost. It's therefore recommended to set aside an emergency fund equivalent to 10 to 20% of the total renovation budget to be able to deal with these unforeseen events without compromising the rest of the work or having to renegotiate your financing.

Be proactive

2) Take advantage of available financial aid

The federal government, provinces, and even some municipalities or energy suppliers regularly offer grants, tax credits, or rebate programs to encourage energy-efficient renovations. Installing triple-glazed windows, insulating your roof, or replacing your heating system with a heat pump can not only reduce your bills but also save you money thanks to incentive programs. Don't hesitate to consult official platforms to see if your project is eligible.

What financial assistance is available?

Conclusion: Residential expansion project in Quebec

The success of your renovation project depends as much on careful budget planning as on choosing the right financing tools. Whether it's a small renovation or a large-scale project, take the time to compare options, assess the real costs, and surround yourself with the right people. Well-considered financing will allow you to turn your ideas into reality, without stress or unpleasant surprises.

Get advice, plan, and start your renovations with confidence!

Contact our team and bring your project to life