How HELOCs help Bostonians transform homes for multigenerational living

As real estate prices and rent continue to rise, many families are turning to multigenerational living arrangements. According to the Pew Research Center, the number of Americans living in multigenerational households has quadrupled since 1971.

This trend is especially noticeable in the greater Boston area, as many young adults struggle to save for security deposits and their first month's rent, which can easily reach thousands of dollars.

If your family lives in a multigenerational home, you might be considering adding to it or renovating rooms to make it more comfortable and functional. Explore how you can use a home equity line of credit (HELOC) as a flexible financing solution to affordably upgrade your space.

What is a HELOC?

A home equity line of credit (HELOC) is a flexible, revolving credit line that lets you borrow against the equity you've built in your home—often making it a practical way to fund renovations that help a multigenerational household live more comfortably. Instead of receiving a lump sum all at once, you can draw what you need (up to your approved limit) as costs come up and pay interest only on the amount you’ve borrowed. Depending on the lender, you may be able to access funds through online and mobile banking, and some lenders offer no application fees or closing costs, such as Citizens.

How a HELOC works

To keep the borrowing process straightforward, it helps to know the key terms you'll see when you apply and start using the line:

• Credit limit: The maximum amount you can borrow from the line at any given time.
• Available credit: What you have left to borrow after subtracting your current balance from your credit limit.
• Draw period: The window of time when you can access funds, repay, and borrow again (often around 10 years).
• Repayment period: The phase after the draw period ends, when you typically repay both principal and interest and can no longer take new draws.
• Variable rate (APR): Many HELOCs have a variable rate that can change over time and is often tied to a benchmark like the Prime Rate, which may affect your payment amount.
• Interest-only payments: During the draw period, some HELOCs allow payments that cover only interest on what you've borrowed (not the principal).
• Equity and loan-to-value (LTV): Equity is the portion of your home you own (home value minus what you owe). LTV helps lenders decide how much you may be able to borrow.

Benefits of using a HELOC for multigenerational home renovations

HELOC vs. home equity loan vs. personal loan

• HELOC: Flexible—draw funds over time; variable rate; interest-only option during the draw period.
• Home equity loan: Lump sum; fixed rate; predictable payments.
• Personal loan: Unsecured; typically higher rates; fixed repayment terms.

From tax advantages and lower interest rates to continued access to revolving funds, HELOCs offer several important benefits that make them well-suited for home renovations.

You only borrow what you need

A HELOC is a revolving line of credit that's backed by the equity in your home. It lets you borrow only what you need up to your approved limit, when you need it. As you repay your balance, your available credit is replenished. This is different from a traditional loan, where you take out a lump sum and start repaying it right away.

Lower interest rates than other borrowing options

Because the equity in your home is used as collateral, a HELOC may have a lower interest rate than unsecured loans, like personal loans and credit cards. You also only pay interest on the amount you draw instead of on the full credit line, which can help reduce your borrowing costs.

Potential tax advantages

HELOC interest may be tax-deductible when the funds are used for qualified home improvements. The money you borrow must be used to buy, build or substantially improve the home that serves as collateral. Repairs and routine maintenance typically don't qualify.

For example, remodeling a bathroom, finishing a basement and adding an addition to your home may substantially improve your home. However, painting walls and repairing an HVAC system are usually considered routine maintenance. Be sure to consult with a tax professional to ensure you're compliant with the latest IRS guidelines.

Improved cash flow management

Most HELOCs allow you to make interest-only payments during the draw period, which can help you manage cash flow during longer renovation projects. The draw period typically lasts 10 years.

After that, you enter the repayment period, where you repay both principal and interest through fixed monthly payments—often over a longer 15‑ to 20‑year timeframe. This extended repayment period can provide more time to pay down your balance compared to credit cards.

Common multigenerational home updates a HELOC can fund

When different generations live under the same roof, you can use a HELOC to ensure your home supports everyone's needs. A home equity line of credit can finance a variety of renovations and expansions that enhance comfort, privacy and functionality.

How to apply HELOC funds to a multigenerational home renovation (step-by-step)

1. Estimate your renovation scope (for example, adding an in-law suite or making accessibility upgrades) and map the work into phases.
2. Check your available home equity and estimate your potential borrowing limit based on your lender's loan-to-value guidelines.
3. Apply for a HELOC and complete the approval process, which may include underwriting, documentation and closing.
4. Draw funds in stages as construction progresses (up to your available credit) to cover invoices and project milestones.
5. If your HELOC offers it, manage cash flow with interest-only payments during the draw period—then plan for higher payments when principal repayment begins.

In-law suites and accessory living spaces

Just because multiple generations live close to each other doesn’t mean you have to sacrifice privacy. Adding an in-law suite or accessory living space can create a more independent and comfortable living arrangement for family members.

• In-law suite: Part of a home is sectioned off to create a separate living area. It typically shares common areas with the home, but may have its own bedroom, living area, bathroom or kitchenette.
• Accessory living space: Typically more independent from the main home, it could be a basement or attic converted into an apartment, or a separate structure in the backyard where someone can live.

Additional bathrooms or kitchen expansions

Kitchens and bathrooms are two of the most heavily used spaces in any home. Expanding or upgrading your kitchen may give you more room to prepare and serve meals. Adding extra bathrooms could make it easier for everyone to get ready for work, school and other responsibilities without disrupting one another.

Separate entrances or privacy-enhancing layouts

If you have an in-law suite or accessory living space, adding a separate entrance or reworking the layout may improve privacy. This can be especially helpful if family members have different schedules, so they can come and go without disrupting the rest of the family.

Accessibility and aging-in-place modifications

Accessibility upgrades can help family members with mobility challenges maintain independence and make it easier for them to move around. Potential upgrades include:

• Widening doorways and hallways
• Adding wheelchair ramps
• Installing stair lifts
• Lowering counters and cabinets

You can also help reduce the risk of falls and other injuries with aging-in-place modifications, such as

• Walk-in showers and tubs
• Raised-height toilets
• Grab bars
• Handrails
• Non-slip flooring

Energy efficiency and heating upgrades for larger households

Larger households often have higher utility bills, but upgrading an older water heater or HVAC unit may help lower energy costs. Newer units are typically more efficient and may also reduce the need for inconvenient and costly repairs.

Upgrades and new installations that can improve comfort and make your home more environmentally friendly include:

• Sealing leaky ductwork
• Adding attic insulation
• Upgrading windows
• Installing solar panels

Planning renovation stages with a HELOC

A HELOC for a home renovation is especially useful for projects you complete in stages. With a traditional loan, you have to estimate the full project cost and borrow a lump sum.

But what if your plans change during the project? What if you run into an unexpected problem, like discovering rotted sub-flooring during a bathroom renovation? If the costs exceed your budget, you may have to take out an additional loan to cover the difference.

A HELOC offers a more flexible way to borrow. For example, if you are remodeling your kitchen:

1. In the first stage, you could draw funds for new countertops and cabinets.
2. When you’re ready for the second stage, you can draw additional funds for new flooring and appliances.
3. For future stages, align the renovation timeline with your family's needs while minimizing disruptions.

Using a HELOC in stages also helps prevent borrowing more than you need, and interest-only payments during the draw period may make cash flow easier to manage while construction is underway.

Choose a HELOC to finance your multigenerational home update

In a multigenerational home, the right upgrades can improve everyone's comfort, privacy and independence. A HELOC offers a flexible and affordable way to complete those updates by letting you borrow as needed.

Ready to update your multigenerational home? Get your HELOC rate today to see how affordable your next project could be.

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