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Basement finishing financing

Looking to finish your basement? Here's where to get financing for your project.

If your basement is more like a cavern than a cozy nook, getting a loan for basement finishing may be on your mind. But with the cost to finish a basement dependent on so many different factors, you’ll likely want to explore different types of basement renovation financing before you decide on the best option for you.

Where can I get basement renovation financing?

From secured options that use your home as collateral to contractor financing and personal loans, here are five ways to get a loan for basement finishing:

1. Personal loan

  • Best for: Borrowers with average credit scores and reasonable incomes

You can take out a personal loan for basement finishing to cover any costs that may come up. Your interest rates will typically be higher than with home equity loans, but you may be able to get a better deal if you make a high income and have an excellent credit score. Your credit score will go down significantly if you default on payments, but on the plus side, you won’t risk losing your home.

What you get

  • Many options for financing.
  • No collateral required.
  • Lump sum of money.

What to watch out for

  • Higher interest rates for bad credit.

Compare personal loans

Name Product Interest Rate Loan Amount Loan Term Requirements Credit Score Link
LoanConnect Personal Loan
Secured from 1.90%, Unsecured from 5.75%-46.96%
$500 - $50,000
3 - 120 months
Currents debts must total less than 60% of income
Min. credit score: 300
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An online broker who helps inform clients towards better finances. Get pre-approved by different lenders for unsecured or secured loans in 5 minutes with any credit score.
Spring Financial Personal Loan
17.99% - 46.96%
$500 - $15,000
9 - 48 months
Min. income of $1,800 /month, 3+ months employed
Min. credit score: 400
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More Info
An online lender offering unsecured personal loans and credit builder loans. Those filing for bankruptcy or a consumer proposal can also apply. If you're not eligible for an unsecured loan, you may be offered a loan to help rebuild your credit.
ConsumerCapital Personal Loan
19.99% - 34.99%
$1,500 - $12,500
24 - 60 months
Min. income of $1,900 /month, 6+ months employed
Min. credit score: 600
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More Info
An online lender that provides fast unsecured personal loans. Complete an application in less than 10 minutes and get a decision within 24 hours. For faster loan approval, complete the Flinks bank integration in the app.
SkyCap Financial Personal Loan
12.99% - 39.99%
$500 - $10,000
9 - 36 months
Min. income of $1,200 /month, stable employment
Min. credit score: 550
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More Info
An online lender offering unsecured personal loans to borrowers with a wide range of credit scores. Apply in less than 5 minutes and if approved, receive financing in as little as 24 hours.
FlexMoney Personal Loan
18.90% - 46.93%
$500 - $15,000
6 - 60 months
Min. income of $2,000 /month, 3+ months employed
Min. credit score: 500
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More Info
An online lender offering flexible unsecured loans. Apply in less than 10 minutes and if approved, receive financing in as little as 24 hours. Pay off your loan at any time.
Loans Canada Personal Loan
Secured from 2.00%, Unsecured from 8.00% to 46.96%
$300 - $50,000
3 - 60 months
No min. income or employment requirements
Min. credit score: 300
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More Info
An online broker with the largest lender network in Canada. Get matched for free with lenders offering both unsecured and secured loans through one quick application regardless of your financial situation.
OFFER
Mogo Personal Loan
9.90% - 46.96%
$200 - $35,000
6 - 60 months
Min. income of $13,000 /year
Min. credit score: 500


Mogo offers a 100-day money-back guarantee. If you're not happy with your loan, pay back the principal and get your 100 days of paid interest and fees back.
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An online lender who aims for a hassle-free process through same-day unsecured loan approval and funding. Get a loan fast and track your credit score for free.
Fairstone Personal Loan (Unsecured)
26.99% - 39.99%
$500 - $25,000
6 - 60 months
Able to make monthly repayments on your loan
Min. credit score: 560
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More Info
An online lender with a team dedicated to professional service. Get a quote for an unsecured loan without impacting your credit score. Receive funds within as little as 24 hours. No prepayment fees.
Fairstone Personal Loan (Secured)
19.99% - 23.99%
$5,000 - $50,000
60 - 120 months
Must be a homeowner
Min. credit score: 560
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Use your home equity to get a secured loan up to $50,000 with flexible repayment options and a long loan term. Get a quote without impacting your credit score.
Loan Away Personal Loan
19.90% - 45.90%
$1,000 - $5,000
6 - 36 months
No min. income or employment requirements
Min. credit score: 300
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More Info
A lender that approves unsecured loans in as little as 20 minutes. Get affordable monthly repayments with any credit score.
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2. Home equity loan

  • Best for: Borrowers who want to use their home to secure financing

A home equity loan is a fixed-rate loan that uses the equity you have in your home to secure your basement renovation financing. You’ll get a lump sum of money upfront and pay it back over a set term. Typically, interest rates on home equity loans are much lower than other types of loans.

What you get

  • Lower interest rates.
  • No restrictions on how you spend funds.
  • Easy to qualify if you own your own home.

What to watch out for

  • Your home is used as collateral.
  • You may need to pay closing costs (ranging from 2 – 5% of loan costs).
  • Larger mortgage repayments.

Apply for a home equity loan for basement finishing

Name Product Interest Rate Loan Amount Loan Term Requirements Credit Score Link
Fairstone Personal Loan (Secured)
19.99% - 23.99%
$5,000 - $50,000
60 - 120 months
Must be a homeowner
Min. credit score: 560
Go to site
More Info
Use your home equity to get a secured loan up to $50,000 with flexible repayment options and a long loan term. Get a quote without impacting your credit score.
Alpine Credits Home Equity Loan
10.00% - 22.99%
$10,000 - $500,000
Up to 60 months
Must be a homeowner
Min. credit score: 300
Check eligibility
More Info
Alpine Credits offer home equity loans in amounts from $10,000 to $500,000. Must be a homeowner to qualify. Check eligibility for this loan through LoanConnect.
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3. Line of credit (home equity line of credit or personal line of credit)

You can secure a line of credit against your home (home equity line of credit) or take one out as unsecured financing (personal line of credit). Any line of credit you choose will allow you to borrow a revolving pool of financing for your basement renovation that you can tap into whenever you need to. The best thing is that you only have to pay interest on the money you take out of your “wallet”.

What you get

  • Access to revolving pool of funds.
  • Only pay interest on what you take out of your wallet.
  • Money becomes available again as you make repayments.

What to watch out for

  • Tempting to overspend due to ease of access.
  • Can be difficult to forecast and budget for repayments.
  • Most come with variable rates.

Compare home equity lines of credit

Name Product Interest Rate (APR) Min. credit score Provincial availability Other loans offered
Tangerine Home Equity Line of Credit
2.35%
Prime -10
620+
All of Canada
First mortgage, HELOC, Refinancing
Withdraw funds from your HELOC, make payments and pay off your balance in full at any time.
Breezeful Home Equity Line of Credit
Varies
600
All of Canada
First mortgage, Second mortgage, HELOC, Reverse mortgage, Rent to own
Breezeful is a 100% online mortgage broker that connects borrowers to competitive rate offers from over 30+ banks and mortgage lenders.
Homewise Home Equity Line of Credit
Varies
600
Not available in Quebec
First mortgage, Second mortgage, HELOC, Bridge mortgage
Homewise's personal advisors can get you HELOC rates from over 30 banks and lenders.
intelliMortgage Home Equity Line of Credit
Varies
680
AB, BC, NL, ON, PE
First mortgage, HELOC
intelliMortgage is an online mortgage broker that works with over 100+ banks and mortgage lenders across Canada.
Loans Canada Home Equity Line of Credit
3.45% - 10.99%
400
All of Canada
First mortgage, Second mortgage, HELOC, Refinancing, Bridge mortgage
Loans Canada connects borrowers with a broker in their area. Bad credit, EI and CERB applicants are considered.
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4. Contractor financing

  • Best for: Borrowers who don’t want to apply for external financing

Your contractor might offer basement financing backed by a bank or private lender. You can often borrow larger amounts with this type of financing but you could end up paying higher interest rates if your contractor decides to add a margin on top of the rate being charged by the lender. This is why you should compare your contractor’s financing to financing from other banks and private lenders to make sure you’re getting a good deal.

What you get

  • Easy to access directly from the contractor.
  • Faster loan approvals (sometimes same-day).
  • Possible to qualify for larger amount.

What to watch out for

  • Contractor may add a margin on top of interest rates.
  • Other fees could be built in to your purchase price.
  • Difficult to compare prices.

5. Credit card

  • Best for: Borrowers who need to pay for smaller expenses

While it’s not a good idea to pay for the entire cost of finishing your basement with a credit card, it can be useful for smaller expenses such as materials or fixtures. Look into credit cards with 0% APR introductory periods to spread the costs out over several months without paying interest.

What you get

  • Easy application process.
  • Quick access to funds.
  • Potential to earn rewards.

What to watch out for

  • Higher interest rates than typical loans (usually around 19.99%).
  • Not good for large expenses.

Representative example: Jan finishes his basement

Jan has saved up $10,000 to finish his basement, but needs another $9,000 to pay for contractors and supplies. With an excellent credit score of 810, Jan heads to his bank and is approved for a loan for $10,000 – borrowing an extra $1,000 will ensure he can cover any unexpected expenses.

Cost of supplies/labour$19,000
Loan typePersonal loan
Loan amount$10,000
Interest rate5%
Loan term2 years
Additional feesOrigination fee of 3% ($300)
Monthly payment$438.71
Total loan cost$10,729.13
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.

How to get a loan to finish your basement

You can get your hands on basement financing by filling out an application with the following sources:

  • Banks. Many banks will happily give you a loan for basement finishing if you have good credit. Just be aware that basement financing from the bank often comes with higher interest rates and more strict eligibility requirements. Providers include BMO, TD Bank, RBC, CIBC, Scotiabank, HSBC, Canadian Western Bank and National Bank.
  • Credit union loans. Credit unions are a good place to look for basement financing loans if you’re already a customer or are prepared to become one. Credit union loans for basement renovation financing will often be more flexible and less expensive than those on offer from the big banks. Providers include Meridian, Servus, Vancity, Connect First, Conexus, First West, Steinbach, Alterna Savings and Coast Capital Savings.
  • Online lenders. You can fill out an application for basement financing from an online lender. These loans may be easier to qualify for and you could be eligible for larger amounts. Just make sure you work with a reputable lender to avoid scams. Providers include Loans Canada, FairStone, Mogo Loans and LoanConnect. Compare online lenders for personal loans.
  • Your contractor. You may be able to ask your contractor about basement financing if they offer third-party loans. Just make sure they aren’t marking up your interest rates or charging unnecessary fees before you sign on.

What are the eligibility requirements?

The eligibility requirements to apply for basement financing will vary depending on which lender you go with. You may need to meet the following requirements to get approved:

  • Canadian citizen or resident. You’ll typically be required to show a government issued ID to prove that you’re a Canadian citizen or permanent resident.
  • Canadian bank account. You may need to provide banking details so that your basement financing loan can be deposited into your account.
  • Decent credit score. You’ll usually be required to have a credit score over 650, especially if you want to get decent interest rates on your loan for basement finishing.
  • High income. You should be able to demonstrate that your income is high enough to make your repayments and also cover all of your other debts and financial obligations.
  • Steady employment. Your lender will typically want you to show that you’ve been with the same company for a reasonable period of time, usually at least three months.

What documents do I need to provide?

You may need the following documents to apply for basement financing:

  1. Bank statements. Lenders will often want to see how much money you make each month and what your monthly bills look like.
  2. Tax returns. You could be required to show your personal tax returns to verify your annual income.
  3. Credit history. You’ll typically need to authorize your lender to check your credit score.
  4. Collateral. You may be required to submit information about the collateral you want to use to secure your payments if you’re applying for a secured or home equity loan.

Can I get a loan to finish my basement with bad credit?

You may be able to get a loan to finish your basement with bad credit if you’re willing to accept higher interest rates. You can apply for a bad credit loan from many online lenders, but it’s often very expensive and you may have difficulty getting approved, depending on how low your score is. In these cases, it could be better to try to build up your credit score before you apply for basement financing.

How much does finishing a basement cost?

The average cost to finish a basement could range from $1,000 up to $40,000 but this will depend on your square footage, your choice of upgrades and the cost of materials. It all depends on how much work you want done. If you’re starting from scratch, here are a few of the most common expenses:

  • Framing and hanging drywall. Contractors can charge from $7 to $18 per square foot for labor and materials
  • Insulation. Insulation can cost anywhere from $1.40 to $3.50 per square foot, with extra costs added on for labour and installation.
  • Plumbing and electrical work. You will typically pay several thousand dollars for any serious plumbing or electrical work you need done.
  • Flooring. You’ll usually pay a few thousand dollars to install new flooring in your basement, depending on your basement’s size and the materials you use.
  • Painting. You may pay only a few hundred dollars to paint your basement, depending on how big it is. Professional painters will cost more.
  • Pouring new foundation. Installing a new foundation can cost upwards of $10,000 to $15,000, depending on the size of your basement.

It’s a smart idea to set aside extra funds for unexpected expenses as they come up. This will allow you the flexibility to continue your project without needing to renegotiate your finances or re-apply for new funds. You may also want to take a line of credit out for more than you actually need to cover unexpected expenses as they arise.

4 ways to save on the cost of finishing your basement

Finishing your basement may not be the most expensive home improvement project, but there are still ways to keep your costs down:

  • Do it yourself. You may want to leave the structural components to the experts, but you can still try your hand at small jobs such as painting or installing light fixtures to save money. And if you’re really looking to cut costs, you can manage the project yourself rather than hiring a full-time contractor.
  • Build an open layout. Limiting the number of walls you build — and choosing an industrial open ceiling — can save money. The fewer rooms you have, the less you’ll spend on framing, wiring, drywall and paint.
  • Choose standard options. Standard materials and fixtures will go a long way in reducing your costs. In addition, avoid expensive features like a wet bar or home theater. These require specialized work that can quickly increase your budget.
  • Shop for used furniture. If you need to furnish your basement once it’s finished, you can comb through your local thrift stores for gently used furniture. You might even be able to find fun statement pieces or a neat DIY project without breaking the bank.

While affordability is important, don’t skimp on the essentials. You’ll want to hire experienced electricians and plumbers, and invest in systems that will prevent mold and mildew issues later on down the road.

Bottom line

There are several financing options at your disposal to pay for your basement project ranging from a home equity line of credit to a consumer credit card. Make sure you decide which one is best for you based on your personal financial situation and the overall scope of your project. If you need a larger sum than your personal savings and credit card can handle, you might want to explore your personal loan or home equity loan options instead.

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