A home equity line of credit (HELOC) can make it difficult to determine your payments or how long it will take to pay your loan off. Because HELOCs are adjustable-rate loans during their draw period, the rate can fluctuate, sending your payments up or down.
This calculator shows you your line of credit amortization schedule. In other words, you can calculate how many months it will take you to pay off your HELOC, even if you want to make additional payments or future draws from your line.
A home equity line of credit, or HELOC, allows homeowners to borrow cash against the equity they’ve built in their homes by giving them a line of credit with a specific limit they can repay over time.
A HELOC is like having a credit card secured by your home equity but with a much lower interest rate than you can get with a credit card or other unsecured loan. Since home equity loans are a type of mortgage, the interest you pay is tax-deductible up to certain limits.
So, how much can you borrow? Our home equity loan calculator can help you see how big of a loan you can secure with your available home equity.
HELOCs and Home Equity Loans are both loan types that allow homeowners to borrow against the equity in their homes. However, HELOCs and home equity loans have distinct differences.
HELOCs operate like a credit card with a predetermined credit limit, allowing borrowers to withdraw funds as needed during a draw period. On the other hand, home equity loans provide borrowers with a lump sum upfront, usually with a fixed interest rate and a fixed repayment term, commonly ranging from 5 to 30 years.
With a HELOC, borrowers only have to make interest payments at first, whereas with a home equity loan, borrowers receive the entire loan amount at once and begin repaying both the principal and interest immediately.
Use our HELOC and Home Equity Loan calculator to see which loan type would suit you better.
A HELOC has two phases.
Phase 1 is the draw period, where you can borrow against the line of credit as you wish.
HELOCs function as interest-only loans during the draw phase, which usually lasts for 5 to 10 years. In other words, you’re only required to pay the interest charges during this time and don’t have to repay any loan principal.
Phase 2 is the repayment period during which you must repay the borrowed money. The repayment phase usually lasts 10 to 20 years, and you cannot borrow additional funds during this time. Monthly payments in the repayment period include both principal and interest, and the interest rate may still be variable, leading to potential fluctuations in the payment amounts.
Many borrowers refinance into a new HELOC at the end of the draw period. Some borrowers refinance to avoid the shock of the higher monthly payments required to repay both loan principal and ongoing interest charges. Other borrowers refinance to keep their line of credit open.
One of the advantages of HELOCs is that they typically do not have prepayment penalties.
Here are some strategies you can use to pay off your HELOC faster:
Refi.com is a property of Three Creeks Media, LLC. Neither Refi.com nor Three Creeks Media are associated with or endorsed by the U.S. Departments of Defense or Veterans Affairs. The content on Refi.com is produced by Three Creeks Media, its partners, affiliates and contractors, any opinions or statements on Refi.com should not be attributed to the Dept. of Veterans Affairs , the Dept. of Defense or any governmental entity. If you have questions about Veteran programs offered through or by the Dept. of Veterans Affairs, please visit their website at va.gov. The content offered on Refi.com is for general informational purposes only and may not be relevant to any consumer’s specific situation, this content should not be construed as legal or financial advice. If you have questions of a specific nature consider consulting a financial professional, accountant or attorney to discuss. References to third-party products, rates and offers may change without notice.
Advertising Notice: Refi.com and Three Creeks Media, its parent and affiliate companies, may receive compensation through advertising placements on Refi.com. For any rankings or lists on this site, Refi.com may receive compensation from the companies being ranked; however, this compensation does not affect how, where, and in what order products and companies appear in the rankings and lists. If a ranking or list has a company noted to be a “partner” the indicated company is a corporate affiliate of Refi.com. No tables, rankings, or lists are fully comprehensive and do not include all companies or available products.
Editorial Disclosure: Editorial content on Refi.com may include opinions. Any opinions are those of the author alone, and not those of an advertiser to the site nor of Refi.com.
Information from your device can be used to personalize your ad experience.
