Making Room to Grow: Smart Ways to Finance a Home Addition

Home Blog Making Room to Grow: Smart Ways to Finance a Home Addition

Posted On: August 4, 2025 by Peoples Bank of Kankakee County in: Home Mortgages Saving

Thinking about adding a home office, expanding your kitchen, or building that dreamy sunroom you’ve always wanted? A home addition is a big step, and a meaningful one. It’s not just about adding square footage; it’s about creating space for new experiences, growing families, or changing needs.

But like any big project, a home addition comes with costs. Planning ahead for how you’ll finance it is just as important as picking the right contractor or design. At Peoples Bank, we’re here to help you make smart, informed decisions about how to fund the next chapter in your home’s story.

Why Consider a Home Addition?

Whether you’re accommodating a new family member, carving out space for remote work, or increasing your home’s value before selling, there are plenty of great reasons to invest in your space.

Unlike a move, a home addition lets you stay rooted where you’re comfortable — same neighborhood, same schools, same sense of home — while adapting to life’s changes.

Estimating the Cost

Home additions vary widely in price depending on size, materials, and the complexity of the project. According to recent estimates, homeowners can expect to spend anywhere from $20,000 to over $100,000. That’s why having a clear budget (with room for surprises) is essential. You’ll want to factor in:

Design and architectural fees
Permits and inspections
Labor and materials
Furniture or appliances for the new space

Now, let’s talk about how to pay for it.

Financing Options for Your Home Addition

When it comes to funding a renovation, you have a few routes to consider. At Peoples Bank, we offer flexible options - and local guidance - to help you choose what works best for your budget and goals.

1. Home Equity Line of Credit (HELOC) – Flexline

One of the most popular ways to fund a home improvement project is with a Home Equity Line of Credit, or HELOC. Peoples Bank offers the Flexline Home Equity, which gives you the flexibility to borrow only what you need, when you need it, and pay interest only on the amount you use.

This revolving line of credit is tied to the equity you’ve built in your home. That means the more you’ve paid off, the more you may be eligible to borrow. It’s a great solution for home additions where costs may fluctuate throughout the construction process.

Why consider a Flexline from Peoples Bank?

Competitive rates and local service
Interest-only payments during the draw period
Flexibility to access funds over time
Use only what you need, when you need it

2. Refinancing Your Mortgage

Some homeowners choose to refinance their mortgage to free up cash for a home addition. This can make sense if you also want to take advantage of better interest rates or change the terms of your loan. But refinancing can come with closing costs and other considerations. It’s worth comparing options side by side.

3. Personal Loans or Savings

If your project is smaller or you prefer not to borrow against your home, a personal loan or savings may be the right choice. However, personal loans often come with higher interest rates than HELOCs and may be more difficult to get approved. Tapping into your savings may limit your financial flexibility elsewhere.

Tips Before You Start Your Project

Get a Clear Estimate – Talk to multiple contractors and get itemized quotes so you know what to expect.
Check Local Regulations – Permits and zoning rules vary by location. Peoples Bank team members can help guide you if you’re unsure where to start.
Consider Your Timeline – A HELOC like Flexline allows you to access funds as you go, which can align well with the construction timeline.

Let’s Build Something Together

At Peoples Bank, we’re more than a place to finance your home improvement, we’re a local partner who understands the value of home. Our team is here to help you navigate your options, explain the fine print, and offer guidance every step of the way!

Whether you’re planning a major addition or just dreaming for now, we’d love to talk with you.

Learn more about our Flexline Home Equity and how it can help you make your home work better for your life: peoplesbankdirect.com/personal/borrowing/flexline-home-equity

An overdraft occurs when you do not have enough money in your account to cover a transaction, but we pay it anyway. We can cover your overdrafts in two different ways:

We have standard overdraft practices that are available after your account has been open for 30 days and as long as you maintain your account in good standing.
We also offer an overdraft protection plan, Overdraft Protection Sweep, a link to a savings account. It may be less expensive than our standard overdraft practices. To learn more, ask us about this plan.

This notice explains our standard overdraft practices.

What are the standard overdraft practices that come with my account?

After your account has been open for 30 days and as long as you maintain your account in good standing, we do authorize and pay overdrafts for the following types of transactions:

Checks and other transactions made using your checking account number
Automatic bill payments

We do not authorize and pay overdrafts for the following types of transactions unless you ask us to (see below):

ATM transactions
Everyday debit card transactions

We pay overdrafts at our discretion, which means we do not guarantee that we will always authorize and pay any type of transaction.

If we do not authorize and pay an overdraft, your transaction will be declined.

What fees will I be charged if Peoples Bank of Kankakee County pays my overdraft?

Under our standard overdraft practices:

We will charge you a fee of up to $30 each time we pay an overdraft.
The maximum daily overdraft fee per presentment or item paid using the Overdraft Reserve Program is $150.00 per day.
No per item handling fee will be charged on de minimis overdrafts. De minimis overdraft for this policy means transactions that overdraw your account by $30 or less.
There is an overdraft fee of $5 per day that will be charged beginning the 4th consecutive business day your account is overdrawn.

Nonsufficient funds (NSF) fees - if an item drafted by you (such as a check) or a transaction you set up (such as a preauthorized transfer) is presented for payment in an amount that is more than the amount of money in your account and we decide not to pay the item or transaction, you agree that we can charge you an NSF fee for returning the payment. Be aware that such an item or payment may be presented multiple times by the merchant or other payee until it is paid, and that we do not monitor or control the number of times a transaction is presented for payment. You agree that we may charge you an NSF fee each time a payment is presented if the amount of money in your account is not sufficient to cover the payment, regardless of the number of times the payment is presented.

PAYMENT ORDER OF ITEMS - The law permits us to pay items drawn on your account in any order (for purposes of this section "items" means checks, orders and electronic transactions). To assist you in handling your account with us, we are providing you with the following information regarding how we process those items. When processing checks and orders drawn on your account our policy is to pay lower numbered checks and orders in numerical sequence, but electronic transactions are paid first in the order received. The order in which items are paid is important if there is not enough money in your account to pay all of the items that are presented. There is no policy that is favorable in every instance. If the smallest items are paid first, you may have fewer NSF or overdraft fees, but the largest, and perhaps more important items (such as rent or mortgage payments) might not be paid. However, if the largest items are paid first, your most important items might be paid but it may increase the overdraft or NSF fees if funds are not available to pay all of the items. We think our policy attains a reasonable balance between minimizing additional costs to you and paying your more important items. We encourage you to make careful records and practice good account management. This will help you to avoid creating items without sufficient funds and incurring the resulting fees.

What if I want Peoples Bank of Kankakee County to authorize and pay overdrafts on my ATM and everyday debit card transactions?

If you also want us to authorize and pay overdrafts on ATM and everyday debit card transactions after your account has been open for 30 days, you may opt in.

You have an ongoing right to change this consent at any time. If your overdraft privilege has been revoked for any reason, the opt-in or opt-out selection may not apply. Please contact your nearest office for more information.

Alternate ways to Opt In/Out or make changes:

By Phone. Our Customer Care Representatives can be reached at 815-936-7600.
By Mail. Peoples Bank of Kankakee County, 333 E. Court Street, Kankakee, IL 60901
In Person. Please visit your local office and ask a representative to help you decide which plan is best for you.