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Top 10 Benefits of a Home Equity Loan

What you'll learn: Learn about the perks of Home Equity Loans


If you have big plans coming up, you may be considering how to put together the funds you need to pay for them. Whether it’s putting a new roof on your home or adding a pool, paying for college, or planning for retirement living, a home equity loan may offer you greater flexibility and more possibilities than you previously considered.

Not sure whether a home equity loan is right for you? Check out the ten benefits we’ve outlined here, then crunch the numbers for yourself.

1.   Putting Equity to Work

For most people, their home is their largest asset, yet they may do little to put its value to good use. However, with a home equity loan, you can tap into the equity you’ve created through on-time mortgage payments, smart home improvements, and market-related appreciation. This allows you to streamline your finances and simplify your spending. Most of all, it lets you put your biggest source of wealth to work, improving your life.

2.   Adding Value to Your Home

One of the smartest ways to put a home equity loan to work is by adding value to your home. This could involve improvements to your indoor or outdoor space, high-return renovations like kitchen and bath upgrades, or adding square footage by finishing a basement, attic, or garage apartment. Think in terms of both short-term personal enjoyment and long-term resale value when planning your home improvements.

3.   Improving Your Home’s Functionality

Perhaps you need to upgrade your home’s tech infrastructure to support your work-from-home lifestyle. Maybe you need to add a ground-floor owner’s suite due to reduced mobility. You might want a whole-house smart-home update to create a streamlined and integrated system that makes everything more efficient. Whatever you’re considering, a home equity loan can help you implement it so that your home works for you.

4.   Creating Multi-Generational Living Options

If you have elderly relatives who need a little more help these days, a home equity loan can help you create options that work for your family. Perhaps you want to convert an existing part of your home by adding safety features and a private entrance. Maybe you want to install an accessory dwelling unit or tiny house in the backyard for independent living. As more families seek ways to keep each other safe, a home equity loan may create additional good options for all the members of your household.

5.   Possible Tax Advantages

If you use your home equity loan funds to renovate your home, you may be able to deduct the loan’s interest at tax time. It’s wise to use your home’s equity to create value-added improvements that increase your property value. What a win-win! It’s recommended to speak to a tax advisor to ensure the interest is tax-deductible. 

6.   Creating Investment Options

If you’re looking for ways to add to your monthly cash flow, a home equity loan may be an excellent option for adding investment value to your current home. This could come in the form of a conversion of your existing space or as the addition of a new space designed for maximum rental potential. If you’re located in a market with high demand for rentals, this could be a game-changer for your bottom line.

7.   Purchasing a Second Home

If you’ve been considering a second home but were unsure how to finance it, a home equity loan may be what you’ve been waiting for. Purchase a home in a resort area for a year-round vacation home. Purchase a townhome or condo in a college town when the kids go off to college, then keep it as an investment property after they graduate. The possibilities are only limited by your goals and imagination.

8.   Fixed-Rate Financing

Many home equity loans offer low interest, fixed-rate financing with long repayment terms. This means that a home equity loan may make more sense for your needs than other, higher interest financing options. 

9.   Lump-Sum Availability

If you have significant plans for your financial future, a home equity loan offers you a large lump-sum payment that you can put to work immediately rather than paying in installments. That provides more flexibility to plan your purchases on your timeline.

10.  Avoiding Credit Card Debt

If you’re trying to minimize high-interest credit card debt, a home equity loan may be the answer. In addition, you can use a home equity loan to pay off your existing credit cards and create a streamlined, consolidated financial plan that serves you now and in the future.

To learn more about PenFed loans or what loan is right for you:


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After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5


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Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5