How HELOCs Can Help with Home Renovations

Upgrading your kitchen. Reimagining your backyard. Converting the garage into a home office. Whether you’re making small updates or planning a full-scale renovation, one thing’s for sure — home improvements cost money. And unless you have thousands tucked away in savings, financing those dreams can be a challenge. Fortunately, there’s a smart, flexible solution: a Home Equity Line of Credit (HELOC).

A HELOC allows you to leverage the equity you’ve built in your home to fund improvements, repairs, and upgrades. It’s one of the most popular ways homeowners use to reinvest in their properties without turning to high-interest credit cards or draining emergency funds.

What is a HELOC?

A HELOC is a revolving line of credit that lets you borrow against the equity in your home. Equity is the difference between what your home is worth and what you still owe on your mortgage. If you’ve been paying down your mortgage, or your home has appreciated in value, you likely have equity you can use.

Here’s how it works: Once approved, you’re given a credit limit and access to funds during a "draw period," which typically lasts five to 10 years. During this time, you can borrow, repay, and borrow again as needed like a credit card, but typically with much lower interest rates. You’ll often make interest-only payments during the draw period. After that, the loan moves into a repayment phase, where you begin paying back the principal plus interest over a set term.

This structure gives you both flexibility and control. You don’t have to take out a lump sum upfront, and you only pay interest on the amount you actually use.

Why Use a HELOC for Home Renovations?

There are many reasons homeowners turn to HELOCs to fund improvements:

• Lower interest rates. Compared to credit cards and unsecured personal loans, HELOCs usually offer lower rates. That means less money spent on interest and more budget for your project.
• Flexibility. Renovations often happen in phases. A HELOC lets you borrow in stages as your project progresses rather than all at once.
• Tax advantages. If the funds are used for qualified home improvements, the interest may be tax-deductible (Be sure to consult with your tax advisor).
• Increased home value. Investing in your home can boost its resale value, often delivering a strong return on investment.

What Kind of Projects Can a HELOC Fund?

A HELOC can be used for almost any home-related project. Here are a few common ones:

• Kitchen remodels. Upgrade cabinets, counters, and appliances for a modern, functional space.
• Bathroom renovations. Add luxury with new fixtures, tile, and lighting.
• Roof or window replacements. Improve curb appeal and energy efficiency.
• Room additions or conversions. Create an office, guest suite, a home gym, or more living space.
• Outdoor upgrades. Install a new patio, deck, or landscaping to enjoy year-round.

Whether your renovation is purely practical or all about personal comfort, a HELOC can provide you the resources to make it happen.

Is a HELOC Right for You?

Here are a few questions to help you decide if a HELOC is the right move:

• Do you have equity in your home? Most lenders require at least 15–20% equity to qualify.
• Is your credit in good shape? Strong credit can help you secure better interest rates.
• Are you okay with a variable rate? Most HELOCs have variable interest rates, meaning payments can fluctuate.
• Do you have a plan? It’s best to apply for a HELOC with a clear renovation strategy and budget in place.

Also, keep in mind that your home is used as collateral. That means you should borrow responsibly and ensure you can meet the repayment terms.

Smart Ways to Use a HELOC

Using your HELOC wisely ensures you get the most out of your investment. A few tips:

• Create a detailed renovation plan. Knowing exactly what you need helps you borrow only what’s necessary — and avoid surprise expenses.
• Stick to your budget. It’s easy for renovation costs to snowball. Be realistic and disciplined.
• Track your spending. Keep receipts and a running tally to monitor how much you’ve drawn and how much you owe.
• Know your loan terms. Understand your interest rate, payment schedule, and when the repayment period begins.

It’s also worth checking with your credit union to see if there are any promotions, introductory rates, or fee waivers available.

Renovate Smarter with a HELOC from Peak Credit Union

At Peak Credit Union, we make financing your dream renovation simple and affordable. Our ChoiceLine HELOCs offer flexible borrowing, competitive rates, and support from local lending experts who know your community. Whether you're reimagining your kitchen or building a backyard oasis, we’re here to help turn your home improvement goals into reality. Learn more and apply today at PeakCU.org.