Home equity loans also make a good source of quick money for property owners who have the option of borrowing funds on the value of their property as collateral. Home equity loans have fixed interest rates and monthly programmed payment, making them perfect for financing huge amounts such as renovation of a house or consolidation of debt. Acquisition of information concerning fees on home equity loans, however, needs to be a priority in attempting to make sensible money choices.
2025 home equity loan interest rate today
Home equity loan interest rate today is around 8.40%. 10-year home equity loan is higher interest by term, with an average of around 8.54%, and a 15-year with an average of around 8.49%. These vary according to market and can vary further according to credit score and loan-to-value ratio.
Comparison with alternative rates
Suppose the rate is increased somewhat, e.g., to 8.54% for a 10-year loan or to 8.49% for a 15-year loan, so that the monthly payment is proportionately more. E.g., a 10-year loan of 8.54% would be about $1,863.00 per month and a 15-year loan of 8.49% would be about $1,476.23 per month.
Pros and cons of home equity loans
Pros
- Fixed interest rates: Home equity loans’ fixed interest rates, which never shift during the course of the loan, are comforting while planning budgets.
- Fixed monthly payments: Fixed rates are utilized for fixed monthly payments, which make budgeting easier4.
- Tax benefits: Tax deductible is interest on home equity loans, in case home improvement is done, meaning additional savings.
Cons
- Risk of foreclosure: Since the house is collateral for the loan, default can lead to foreclosure.
- Closing costs: Home equity loans have origination and appraisal charges.
- Longer funding time: Home equity loans take longer to get than other loans.
A 2025 $150,000 home equity loan can cost between $1,468.33 and $1,863.00 a month, depending on the interest rate and loan term. While these loans are useful in being fixed-rate and tax deductible, they do have negative aspects in the way of foreclosure and accumulation of debt. Homeowners must be careful of the latter if they intend to utilize their equity to pay for large bills.
Read more: This Independence Day start planning for your own financial independence
