If you’re a homeowner, you may have access to a large sum of money that can be accessed via a much lower interest rate than many popular alternatives. Right now, the average homeowner has around $320,000 worth of equity in their home. And that money can be accessed in a variety of simple ways ranging from reverse mortgages to home equity lines of credit (HELOCs) to home equity loans. Home equity loans, in particular, are especially attractive for owners right now.

The average home equity loan interest rate is just 8.41% right now – almost three times lower than the average credit card interest rate of 23.37%. And that rate is fixed, meaning that it won’t adjust upward if the rate climate heats up again. If the rate climate cools, however, it can be refinanced to take advantage of a better rate. So while the benefits of using a home equity loan in today’s economic climate are clear, the purposes for doing so may not be for many. To that end, below we’ve gathered three reasons why you should consider getting a home equity loan for 2025.

Start by seeing how low of a home equity loan rate you could lock in here.

Why you should get a home equity loan for 2025

Not sure if a home equity loan makes sense for you heading into the new year? Here are three reasons why you should consider using this unique funding source for 2025:

To purchase a second home

Many mortgage lenders prefer you to have a 20% down payment on any home you want to purchase. And that figure could be difficult to come by without accessing your existing home equity. But by applying for a home equity loan to purchase a second home, you may be able to qualify with ease. This second home can then be flipped for a profit, post-renovation or simply used as a rental, amid other popular uses. Still, using your current home as a funding source to buy another one requires a delicate balance. So consider speaking to a home equity loan lender or financial advisor to better determine if this is the right move for you going into 2025.

See how much equity you can access with a home equity loan online now.

To consolidate high-interest credit card debt

Today’s average credit card interest rate is the highest it’s ever been. So if you can consolidate your high-rate credit card debt with a home equity loan, it may make sense to do so. With the average credit card debt hovering near $8,000 right now – before an expected increase in holiday spending – it makes sense to apply now. It can take weeks to have your home equity loan funds disbursed so by shopping around for lenders and rates in December, you can potentially start using your home equity in January to make a dent in your credit card debt.

To boost your home’s value

Certain home projects, like ones highly specific to your fashion sense, are unlikely to boost your home’s value. Others, however, like kitchen and bathroom renovations and new landscaping, can. So consider using a home equity loan for the latter type in 2025. Not only can this potentially raise your home’s estimated value, but you also may qualify to deduct the interest paid on the loan when you file your tax return in 2026. 

“Interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer’s home that secures the loan,” the IRS says. “The loan must be secured by the taxpayer’s main home or second home (qualified residence), and meet other requirements.”

The bottom line

The potential uses for a home equity loan are vast. Like any other borrowing option, however, there are better ways to use this financing source than others, particularly considering the risk of using your home as collateral in these exchanges. Using the funds to purchase a second home, to consolidate today’s high-rate credit card debt or to simply boost your home’s current value could all be smart choices in 2025. By using a home equity loan for these reasons in the new year, you could set yourself up for financial success in 2025 and in the years that follow.

Get started with a home equity loan now.