Home Improvement Loan Calculator (Canada)

What this home improvement loan calculator does

The calculator prices a Canadian renovation two ways side by side. It amortizes the project cost as a fixed-term loan, with the monthly payment, total interest and total cost including any setup fee. It also works out how much home equity credit you can draw under the loan-to-value caps and charges that draw as an interest-only period followed by level repayments.

The two answers rarely agree. A line of credit at 6.45% can end up costing more than a loan at 9.5%, because the line of credit is usually repaid over twice as many years. The calculator makes that trade-off visible.

The two ways Canadians fund a renovation

A fixed-term instalment loan repays the project cost in equal monthly payments until the balance is gone. It may be unsecured or secured against the home; either way it has a fixed end date, a predictable cost and built-in discipline, at a higher rate than borrowing secured by property.

A home equity line of credit gives you an approved limit to draw on, charging interest only on what is outstanding. Rates are variable and tied to the lender’s prime rate, which follows the Bank of Canada. The minimum payment is often interest only, which is why so many HELOC balances last a decade.

A third route, refinancing the mortgage to add the renovation money, usually has the lowest rate but can trigger a prepayment penalty and spreads the cost over the whole amortization. This page does not price it.

How much equity a HELOC releases

Under OSFI’s B-20 guideline, the revolving HELOC cannot exceed 65% of the property value, and the HELOC plus any existing mortgage cannot exceed 80%. Both caps are parameters in the calculator. With a large mortgage, the combined cap binds: on an $800,000 home with $420,000 still owing, total secured debt can reach $640,000, so $220,000 of HELOC credit is available. For a mortgage-free owner, the 65% cap applies instead.

When the project costs more than the available credit, the calculator shows a shortfall. Take it seriously before demolition starts; a half-finished renovation financed by credit cards is a much worse outcome than a smaller one financed properly.

A worked example

With the default inputs, a $35,000 project financed with a 60-month loan at 9.5% costs $735.07 a month and $9,103.91 of interest. Drawn from a HELOC at 6.45% instead, it costs $188.13 a month for 12 interest-only months, then $396.53 a month over ten years, for $14,840.87 of interest. The HELOC’s lower payment comes with about $5,737 more interest, because the balance is outstanding much longer.

Why the cheaper rate often loses

Interest depends on rate and time, and people tend to underweight time. Hold the repayment period constant by setting the HELOC repayment years to match the loan term, and the lower rate wins, as it should. Then lengthen the HELOC period to what you would realistically do and watch total interest climb. The difference is the price of flexibility.

Reading the results

The loan payment is the main figure because it does not move: fixed rate, fixed term, fixed instalment. The HELOC section shows what is available, what is drawn, the interest-only payment during the deferral period, and the payment once repayment starts, a jump that surprises people. The interest difference is the loan interest minus the HELOC interest: positive means the HELOC costs less on your assumptions, negative means the loan does.

What the calculator leaves out

HELOC rates are treated as constant, because nobody can forecast prime. Appraisal fees, legal costs to register a collateral charge, discharge fees and title insurance are excluded and can add a four-figure sum to a HELOC setup. The calculator does not consider whether any of the renovation is deductible, as it can be for a rental part of the property.

All figures are estimates from your assumptions, not a lending decision or offer of credit, and this page is not financial advice. Confirm rates, fees and available credit with your lender before committing to a budget.

About This Tool: Home Improvement Loan

Home improvement loan: use this tool to get an instant, accurate estimate. The figures follow official guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.