Cash vs Line of Credit for Vancouver Renovation: Which Is Better?
Paying Cash vs Using a Line of Credit for Vancouver Renovations
How you finance your Vancouver renovation affects not just total cost but cash flow, flexibility, and opportunity cost. There’s rarely a universally “right” answer — it depends on your financial situation.
Paying Cash (From Savings)
Pros:
- No interest cost — best long-term total cost
- Contractor discipline — spending real money focuses decision-making
- No debt added to balance sheet
Cons:
- Depletes liquid savings buffer
- Opportunity cost: $200,000 in cash vs invested has compounding value
- No flexibility if project costs exceed estimate
HELOC (Home Equity Line of Credit)
Pros:
- Keep savings invested (investment returns may exceed HELOC rate)
- Interest deductible if used for income-producing purpose (e.g., suite)
- Flexibility — draw exactly what you need when you need it
- Pay down faster than mortgage
Cons:
- Interest cost (prime-based, currently ~7–8%)
- Temptation to overborrow
The Math
At 7% HELOC rate, a $100,000 draw for 3 years costs ~$21,000 in interest. If your invested savings return more than 7% compounded, keeping savings invested and using HELOC may make financial sense. Consult a financial advisor for your specific situation.
→ See also: Vancouver Renovation Planning Guide
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