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It’s an ideal time in Canada to start those home renovations that you have put off for far too long.  Along with the 2009 federal budget came good news for Canadian homeowners.  The government announced a new tax credit for home renovations, and one excellent way of taking advantage of these tax savings is to take out a home equity loan on the value of your house.

As well as the new federal tax credit for home renovations, mortgage rates and loan rates are the lowest they’ve been in decades.  Any qualifying home renovations that are of “a substantial and enduring nature” may qualify for the 15% non-refundable tax credit.  As long as you began your renovations after January 27, 2009 and prior to the 1st of February of the next fiscal year, the new tax credit applies to any renovation greater than $1,000 dollars and up to $10,000 dollars maximum.

Note that only one member of each family can claim a credit, however if two families share ownership in a residence and each family contributes to the cost of the renovations then both families can claim a separate tax credit.

The major banks in Canada, including the Royal Bank, have responded with a myriad of options and good interest rates for home equity loans.  In many cases a line of credit or home-equity loan can be secured for as low as 1% over prime, which currently sits in the 2% - 3% range.  Typically a customer is allowed to borrow up to 80% of the value of their home through a mortgage, or a line of credit, or a combination of both.

The first step is to sit down with an experienced local mortgage advisor to review all of the options that are available to the homeowner.  There are a number of choices to be made, and it’s wise to get some advice from people who deal with this type of loan everyday so that you make the best long-term decision for you and your family.