Is a renovation loan right for you? In these situations, it could make sense.

If you’re looking to renovate your home, you may not have the money to pay for that project outright. This especially holds true if you’re talking about a major undertaking, like a full-fledged kitchen remodel or putting in a patio and swimming pool.

The good news is that you don’t have to whip out a credit card and rack up tons of interest charges on it to cover your next renovation. Instead, you could take out a home renovation loan. Many of these loans offer competitive interest rates to make financing your improvements a lot more affordable.

To help you decide if borrowing money to finance renovations is right for you, here are three times when going this route makes a lot of sense.

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1. Your renovation will increase the value of your property

Putting money into your home today could mean increasing its resale value over time so that when you eventually go to sell it, you’ll command a higher asking price. For example, if you borrow $40,000 to remodel your bathrooms, you might get that much money back when you sell your home or close to it. In some cases, you might even get more money back than what you put in.

2. Your renovation will greatly improve your quality of life

Borrowing lots of money to pay for home improvements that will only have a minor impact on your daily life just isn’t worth it. On the other hand, it is worth taking out a renovation loan if the project in question will make living in your home more pleasant or make your home much more functional for your family.

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Say your kitchen and living room are overrun with toys because you don’t have a dedicated playroom for your kids. If you spend the money to finish your basement and convert that space to a playroom, your kids will have an area to hang out, and you won’t have to spend your days tripping over blocks and stabbing your feet on LEGO pieces.

3. Your renovation will make your home less expensive to maintain

In some situations, paying for home improvements will make your house less costly to maintain in the long run. Maybe you have a very old heating system that not only leaves you chilly during the winter, but costs you hundreds of dollars in utility bills from November through March. If you upgrade your heating system to a more energy-efficient unit, your utility costs might shrink so that you eventually recoup some or all of your investment. It will also be nice to get a more comfortable indoor environment where you’re not shivering all the time.

A renovation loan isn’t your only cost-effective option for paying for home improvements. You can also look at doing a cash-out refinance, where you borrow more than your existing mortgage balance and use your remaining cash to cover your renovations. But either way, it’s worth shopping around for renovation loans and seeing what offers you get. You may find that going this route really makes sense, especially if you don’t want to deal with the hassle of trading in your existing mortgage for a new one.