What is a Home Equity Loan

Information on What is a Home Equity Loan Resources

In fact, many are taking advantage of favourable mortgage rates and tax incentives to make investments in their current homes.

These kinds of investments have widespread benefits. With renovations, homeowners can increase the value of their home. When the economy does recover and they choose to relocate, the efforts they make now will pay off handsomely. Mortgage brokers and lenders also benefit as homeowners borrow against the equity in their homes to finance renovations. And, of course, contractors and sellers of building supplies will see sales rise.

There is evidence of the latter already. A July 23, 2009 report in the Globe and Mail noted that sales at hardware and building supplies stores are increasing. In May of 2009, the building and home supplies sector saw sales increase by 1% - double the increase in April. The increase was felt across the board, at home centres, hardware stores, and even gardening supply outlets. Furniture and electronics sales also rose in May - the first increase since July of 2008.

One of the main motivators behind all of this activity is the Home Renovation Tax Credit (HRTC) launched by the federal government in January of this year. The program applies only to home renovations done between January 27 of this year and February 1, 2010. The HRTC will refund homeowners 15% of their expenditures on home renovations worth between $1,000 and $10,000.

With the HRTC, now is the perfect time to update your kitchen or bathroom, build a new deck, or even lay down a new carpet or hardwood floor. Pretty much anything that becomes a permanent part of the home is eligible, from sod to fencing to windows, doors and awnings. You can even claim the credit for improvements made on your vacation home or cottage.

If the renovations you are planning are going to cost a fair bit of money, you may want to consider a home equity loan or line of credit. Home equity loans make good sense for renovations at anytime. They enable you to improve your home and increase its value, for a lower borrowing cost than other types of loans. But with mortgage rates low and predicted to stay low well into 2010, now is an even better time to consider borrowing against the equity in your home.

Add to low interest rates the tax incentives offered by the government, and you have near-perfect conditions for carrying out the home renovations you have planned. So don't wait on your home renovations and home equity loan. You may not see conditions like this again for some time.