This HELOC calculator helps you to understand the payment patterns associated with a home equity line of credit. The calculator begins by asking the user to supply variables such as the current HELOC balance, interest rate on the loan, draw and repayment periods. Using this information, the calculator then provides values that include the monthly payment, ending loan balance, as well as the repayment amount.
The variables used in our online calculator are defined in detail below, including how to interpret the results.
A HELOC can include a lump sum as well as a monthly draw amount. If a lump sum has been previously taken against this line of credit, then enter that value in this section of the calculator.
This is the rate of interest charged on the HELOC. Typically, the interest rate is adjustable, and would consist of a base rate (such as the prime lending rate), plus a profit margin adder for the lender.
While a home equity line of credit usually offers the borrower the ability to withdraw money as necessary, this calculator assumes the borrower is looking for a steady source of monthly income. In this section of the calculator, you would enter the dollars withdrawn each month.
The draw period is the term over which the monthly Loan Withdrawal occurs. The draw period is one of the terms and conditions a borrower will encounter when applying for a HELOC.
As is the case with the Draw Period, the Repayment Period is one of the terms and conditions appearing in the HELOC agreement with the lender. If the HELOC contract specifies complete repayment of the loan after the draw period, then enter a value of 1 in this section. Complete repayment of the loan is sometimes referred to as a balloon payment.
The most common HELOC offered is an interest-only loan. If the HELOC involved a lump sum payment, then an interest-only payment is required each month.
This is the interest-only monthly payment associated with the Current HELOC Balance. This is the money owed the lender each month. If the borrower did not take a lump sum payment, then the Current HELOC Balance and the Monthly Payment will be zero.
The Net Monthly Funds is found by subtracting the Monthly Payment from the Loan Withdrawal value. This is the money taken against the line of credit minus the payment of interest due on any lump sum. If the Current HELOC Balance is zero, then the Net Monthly Funds will be equal to the Loan Withdrawal value.
The Ending Balance is the total amount of money owed the lender, also known as the loan's principal balance. This balance is found by taking the Current HELOC Balance and adding to it the future value of the funds received during the Draw Period.
If the HELOC involves a balloon payment, then the Repayment Amount represents one month's accrued interest plus the Ending Balance. The borrower can also find loans that allow the Ending Balance to be repaid over time. Therefore the Repayment Amount is a function of the Ending Balance, Annual Interest Rate, as well as the Repayment Period.