How to Use a Home Equity Loan to Boost Your Home’s Value
Your home is one of your most valuable assets, and investing in upgrades and renovations can not only enhance your living space but also increase your property’s value. But how do you finance those improvements? A Home Equity Loan offers a smart way to tap into your home’s existing equity to pay for projects that deliver a solid return on investment (ROI).
Let’s explore the best home improvements that offer a high ROI and how a Home Equity Loan from People Driven Credit Union can help you fund these upgrades, potentially boosting your home’s market value.
1. Kitchen Remodel
A kitchen remodel is consistently ranked as one of the best investments you can make in your home. Modernizing the layout, upgrading appliances, and adding new countertops or cabinetry can dramatically improve your kitchen’s functionality and appearance.
Average ROI: A minor kitchen remodel can offer an ROI of 70-80%, depending on the project’s scope and local real estate trends.
Home Equity Loan Fit: If you know exactly how much your remodel will cost, a Fixed-Term Home Equity Loan is an ideal choice. It gives you a lump sum to finance the project with predictable payments over time.
2. Bathroom Upgrade
Bathrooms are another area where homeowners see a high return on their investment. Whether updating an outdated bathroom, adding a new one, or expanding an existing space, bathroom renovations can significantly increase your home’s appeal to potential buyers.
Average ROI: Bathroom remodels typically offer a 60-70% return on investment.
Home Equity Loan Fit: For a bathroom upgrade, a Fixed-Term Home Equity Loan provides the stability of a lump sum to cover the costs of materials, labor, and fixtures. It’s a great option when you have a fixed budget in mind.
3. Curb Appeal Enhancements
First impressions matter. Improving your home’s exterior with landscaping, new siding, or a modern front door can make a big difference in how it is perceived, whether you’re looking to sell or just want to make it more welcoming.
Average ROI: Projects focused on curb appeal, like installing new garage doors, upgrading siding, or adding stone veneer, can offer up to 90% ROI in some cases.
Home Equity Loan Fit: For multiple small to mid-sized projects that may take place over time, a Home Equity Line of Credit (HELOC) can be a wise option, offering the flexibility to borrow as needed.
4. Energy-Efficient Upgrades
Energy-efficient improvements, such as installing new windows, upgrading insulation, or adding solar panels, make your home more eco-friendly, save you money on utility bills, and increase its value.
Average ROI: Depending on the type of improvement, energy-efficient upgrades can yield an ROI of 60-70% while reducing your energy costs over time.
Home Equity Loan Fit: A Fixed Term Home Equity Loan is a good choice for tackling a major energy-efficiency project, like installing solar panels. If your focus is on smaller improvements like window replacements, a HELOC may offer the flexibility to fund multiple projects.
5. Adding More Living Space
Expanding your home by adding a new bedroom or a family room or even finishing a basement can significantly boost its value. Extra square footage is a big selling point; well-designed expansions can offer a great return.
Average ROI: Adding a new bedroom or finishing a basement can provide an ROI of 50-70%, depending on your location and the quality of the build.
Home Equity Loan Fit: A Fixed Term Home Equity Loan is ideal for large-scale projects requiring a significant upfront investment. With a lump sum, you can budget for construction costs, knowing you have a fixed repayment schedule.
Why Use a Home Equity Loan for Renovations?
When it comes to financing home improvements, a Home Equity Loan offers several advantages over other types of loans or credit:
- Lower Interest Rates: Since your home secures home equity loans, they typically come with lower interest rates than unsecured loans or credit cards, saving you money over time.
- Fixed Payments: With a Fixed-Term Home Equity Loan, you’ll enjoy predictable monthly payments and a fixed interest rate, making it easier to budget for your renovation project.
- Flexible Borrowing: If your project involves multiple phases or unpredictable costs, a HELOC allows you to borrow as needed, paying interest only on the amount you use.
For more information about using a Home Equity Loan for home improvements, read our blog post: How to Choose the Best Loan for Your Next Home Project.
Ready to Boost Your Home’s Value?
Whether planning a kitchen remodel, a bathroom upgrade, or adding curb appeal, using a Home Equity Loan to fund your project can help you maximize your investment in your home. If you’re ready to get started or have questions about which loan option is right for you, People Driven Credit Union is here to help.
Visit our Home Equity Loan page to learn more or speak with one of our financial experts today to explore how a home equity loan can help you achieve your renovation goals.
Spring into Savings!
No-Fee Home Equity Loan Promotion
March 19, 2025 through April 30, 2025
- No Fees on Fixed Term Home Equity Loans and Home Equity Lines of Credit -
For eligible new home equity loans.
