Low Mortgage Rates
Although they have risen somewhat, mortgage rates are still very low. Home equity loans and mortgage refinancing are two options that allow you to tap into the equity in your home to finance home repairs and renovations.
With a home equity loan or second mortgage you borrow the amount you need for your home improvements, with the equity in your home acting as collateral.
You can also refinance, by paying off your existing mortgage and taking out a new one. There may be penalties involved, depending on the terms of your current mortgage, so be sure to talk to an accredited mortgage professional before making a final decision.
In either case, you will have the money you need at an affordable interest rate, so you can make the changes you want to your home.
Home Renovation Tax Credit
For a limited time, the Canadian government is offering a home renovation tax credit. To qualify, the work must be done between January 27, 2009 and February 1, 2010. The tax credit applies to any renovations valued between $1,000 and $10,000, providing a maximum tax credit of $1,350.
The credit applies to a wide range of home improvements, including kitchen and bathroom renovations (which also offer the highest return on investment), painting, re-shingling, new carpet or hardwood, fences and decks, landscaping and more.
It also applies to certain eco-retrofits, like new furnaces, water heaters and air conditioners. Eco-retrofits also have their own incentive, discussed in the next section.
EcoEnergy Retrofit Grants
The federal government – and many provinces – are offering grants for homeowners who improve the energy efficiency of their homes. Energy Star water heaters, furnaces and air conditioners are just some examples of items that qualify for grants in this program. To receive the grant, you must have an authorized firm carry out a pre-renovation and post-renovation energy audit, in order to gauge the effectiveness of the changes you make. The more energy efficient your changes, the higher the grant.
The Time Is Right for Renovations to Your Home
The types of changes outlined above are investments in your home. Renovations to kitchens and bathrooms can increase the value of your home. Eco-retrofits can reduce your utility bills and make your home more attractive to potential buyers.
With low mortgage rates making home equity loans affordable, and government plans adding more incentive, this might be the ideal time to install that new furnace or update your kitchen. More information about government programs is available online. To learn more about mortgage options, talk to an accredited mortgage broker.