Financing
Paying for a major renovation.
Most renovation projects are funded through a combination of home equity, refinancing, and cash. Here's how homeowners typically approach it.
How most renovations get funded
A meaningful renovation is a significant financial decision. The homeowners we work with typically fund their projects through one of three approaches, sometimes a combination of them. These are common approaches, but availability depends on your financial situation, available equity and lender requirements.
ScaleBig is not a lender, broker, or financing provider. The overview below is meant to give homeowners a baseline understanding of how renovation financing usually works in Ontario, so the conversation with their bank or broker is more informed.
Common financing approaches
Home Equity Line of Credit (HELOC)
A HELOC is a revolving line of credit secured against your home's equity, typically up to 65% of the home's value (combined with the existing mortgage, up to 80%). A HELOC can allow funds to be drawn as the project progresses, with interest generally charged on the amount borrowed. Your lender confirms the available structure and terms. Interest rates are variable and tied to the lender's prime rate.
Mortgage Refinancing
Refinancing means breaking and replacing your existing mortgage with a larger one, taking out the difference in cash. A bank or mortgage broker can help compare refinancing with other options, taking account of interest rates, available equity, penalties and repayment terms. Refinancing typically involves penalties to break the existing mortgage, which should be weighed against the new rate and structure.
Cash or Existing Savings
Many homeowners pay for renovations directly from savings, investment accounts, or proceeds from a recent property sale. This avoids interest costs entirely and simplifies the project, but requires sufficient liquidity to absorb the full project cost plus any contingencies.
Combination Approach
Some homeowners use a combination of funding sources, a HELOC covering most of the project with cash covering the remainder, or a HELOC for the construction phase with intent to refinance into the mortgage at term renewal. Your bank or broker can model the options against your specific financial picture.
What to ask your lender
A few questions worth raising with your bank or broker before committing to a renovation budget. These help ensure the financing structure fits the project, not just the headline rate.
What's the total accessible amount?
Combined mortgage + HELOC against your home's appraised value determines your ceiling. Knowing this number sets a realistic project budget.
Is the rate variable or fixed?
HELOCs are typically variable. Refinanced mortgages can be either. The choice has real cost implications over the life of the loan.
What are the draw and repayment terms?
For HELOCs, can you make interest only payments during construction? What happens at project completion? Understanding the structure helps with cash flow planning.
Are there setup or appraisal costs?
Most home equity products require an appraisal and may involve setup fees. These should be factored into the total cost of financing.
How does this affect your existing mortgage?
A HELOC adds a secured loan against the home. Refinancing replaces the existing mortgage. Each has different implications for renewal, prepayment, and total debt service ratios.
How we structure payments
ScaleBig works on fixed price contracts with clear milestone based payments. The structure is consistent across projects, detailed in every proposal, and designed so homeowners always know what they're paying for and when.
Design & Pre Construction
Design sessions, renderings, and feasibility work are billed as professional services during the design phase. These fees are credited toward the construction agreement when the project proceeds.
Construction Deposit
A construction deposit is paid on signing the construction agreement. This covers project mobilization, materials procurement, and the first phase of work.
Milestone Draws
Progress payments are tied to defined construction milestones, such as demolition complete, rough ins complete, drywall complete, and finishing well underway. Each draw is documented and tied to verifiable progress on site.
Holdback
A final holdback is reserved until project completion, final walkthrough, and any punch list items are resolved. The holdback is released on substantial completion of the work.
Changes in Scope
Any changes to the original scope are documented as written change orders, signed before the work proceeds. The original contract price does not change unless a written change order is approved.
The exact milestone breakdown and payment percentages for your project are set out in your fixed price proposal, along with the scope by category, allowances, milestones and a dated schedule.
Plan the project, then plan the financing.
The most useful sequence is the same on most projects: get a clear scope and a real budget from a site assessment, then take that number to your bank or broker to confirm how it fits. Planning the financing before the project is defined often leads to budgets that don't match the actual work.
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