How to get a ​​renovation loan

Check with your bank

Carrying out home renovations, whether on a house, cottage, or garage, represents a major investment. Whether your goal is to expand your space, modernize your facilities, or improve your property's energy efficiency, the question of financing arises early in the process.

At Plan Maison Québec, we know that the success of your project depends on careful planning and access to well-tailored financial solutions. This article explains how to obtain a ​​renovation loan for your renovations, exploring the different types of financing available in Quebec and Canada, and providing practical advice to maximize your chances of approval.

1. The renovation mortgage: an integrated solution

2. Personal renovation loans: more accessible, but more expensive

3. The Canadian Greener Homes Loan

4. Prepare a solid file for your renovation loan

5. Choosing the right type of financing

6. Project and budget planning: an essential step

The ​​Quebec ​​renovation loan mortgage: an integrated solution

One of the most popular options for financing major renovations is to include the work in a mortgage. This type of loan is often referred to as a "renovation mortgage" or "combined purchase-renovation loan" when used to purchase a property requiring improvements. It is generally available when purchasing a home or when renewing a mortgage. This type of loan is based on the future value of the property after the renovations.

This means that you must first have the home's potential assessed once the renovations are completed, to demonstrate that the investment will actually increase its value. Financial institutions then examine your borrowing capacity based on this projected value. It is therefore essential to have an accurate, professional estimate supported by well-defined plans, such as those our team at Plan Maison Québec can provide. The accuracy of this estimate directly influences the amount you can be loaned.

Financing your project

Personal renovation loans: more accessible, but more expensive

For smaller projects or projects you want to complete quickly, a personal renovation loan can be a flexible solution. Unlike a mortgage, it doesn't require a change to your current mortgage. It's often used for urgent projects or when the work doesn't warrant a complete revaluation of the property.

This loan is easier to obtain, but interest rates are generally higher. Some financial institutions, such as Desjardins, offer products specifically designed for this type of need. It's important to compare terms, as the total cost of financing can vary considerably from one institution to another. A personal loan is useful for targeted renovations, such as modernizing a kitchen or bathroom, or for upgrading certain essential elements like electrical or plumbing. At Plan Maison Québec, we always recommend accompanying these efforts with a detailed plan to facilitate financing applications.

The Canadian Greener Homes Loan

For homeowners looking to improve their homes' energy efficiency, the federal government has established the Canada Greener Homes Loan. This program, managed by Natural Resources Canada, offers up to $40,000 in interest-free financing, repayable over 10 years. It is intended for homeowners undertaking renovations to reduce their energy consumption.

To qualify, you must first have your home's current energy performance assessed by a certified advisor. Based on this assessment, specific recommendations will be made. If the planned work meets the program's criteria, you can then apply for a ​​Quebec renovation loan. The program allows for an advance payment to cover certain initial costs, which is useful when down payments are required by the contractor.

Prioritize a sustainable project

Once the work is completed, a second assessment is required to confirm that the renovations were carried out according to the plan. This program targets specific renovations, such as insulating the thermal envelope, replacing doors and windows, installing a high-efficiency heating system, heat pumps, or smart thermostats. It does not cover all renovations, but can be combined with other provincial assistance, including the Rénoclimat program, to maximize your financing. The Plan Maison Québec team will assist you in selecting eligible work and developing plans that meet the program's requirements.

Prepare a solid file for your renovation loan

Obtaining a loan for your renovations depends not only on the presentation of your project, but also on your ability to demonstrate its feasibility, profitability, and impact on your property's value. It's crucial to have an estimate of your home's future value after the work is completed. This professional assessment allows financial institutions to assess the suitability of the requested loan. The more well-prepared your application is, the greater your chances of approval.

Another key aspect is the clarity of the renovation project. You must be able to explain what work will be carried out, in what order, at what cost, and by whom. Quotes from reputable contractors, accompanied by detailed plans, significantly strengthen the credibility of your application.

At Plan Maison Québec, we help you produce clear and comprehensive documents that meet lenders' expectations. Finally, the nature of the planned work also influences loan approval. Institutions prefer to finance "solid" projects, i.e., projects whose impact on value is easily demonstrable, such as improving insulation, renovating kitchens or bathrooms, or upgrading heating systems. Renovations that are too speculative or complex, such as major structural modifications or non-essential architectural additions, may be more likely to attract reluctance.

How to do it?

Choosing the right type of financing

The choice between a mortgage, a personal loan, refinancing, or using a line of credit depends on several factors: the current value of your property, your income, your credit score, the nature of the work, and your repayment horizon. A renovation mortgage is often more advantageous in the long term because it offers lower interest rates.

However, it requires more preparation and is only available in certain situations (purchase or mortgage renewal). A personal loan, which is faster, is useful for urgent or smaller needs. The federal Greener Homes Program is an excellent opportunity if your work is eligible. It allows you to finance up to $40,000 interest-free, which is rare in the current climate.

To maximize your chances, you must follow all administrative steps, including the energy assessment, approved quotes, and final inspections. It is also advisable to consult a mortgage broker or financial advisor to identify the financing strategy best suited to your situation. At Plan Maison Québec, we collaborate with several experts in the field who can guide you towards the best options.

What type of financing?

Project and budget planning: an essential step

Before even committing to a loan application, it's crucial to take the time to plan your project and establish a precise budget. Poor cost estimates or incomplete planning can compromise not only financing, but also the completion of the project itself.

By defining priorities, analyzing the construction stages, and estimating deadlines, you ensure you remain in control of your project from start to finish. A structured budget will allow you to justify each expense item to financial institutions and demonstrate the project's coherence.

At Plan Maison Québec, we help you transform your vision into concrete, detailed plans, which will serve as a solid foundation for establishing a realistic budget. Good planning not only gives you peace of mind but also strengthens the credibility of your financing application.

Plan your project

Conclusion

Obtaining a loan for your renovations is entirely possible if you take the right approach. By identifying the right type of financing, preparing a solid application, surrounding yourself with the right partners, and creating professional plans, you significantly increase your chances of success.

Whether you're looking for energy-efficient improvements, an expansion of your space, or a complete home transformation, financing solutions exist, and several government programs are available to support you.

At Plan Maison Québec, we support you from the design of your project to the finalization of your financing application. Our expertise not only allows you to have quality plans, but also to better present your project to financial institutions.

Together, let's bring your vision to life, while optimizing the resources at your disposal.

Contact our team and bring your project to life