Use the comprehensive **home equity line of credit mortgage calculator** to estimate your potential monthly payments during the repayment phase of your HELOC. Enter your drawn principal, the current interest rate, and the remaining repayment term to see your required minimum payment.
Home Equity Line of Credit Mortgage Calculator
Home Equity Line of Credit Mortgage Calculator Formula
The calculation for the minimum monthly payment during the Repayment Phase of a HELOC typically uses the standard amortization formula:
Formula Source: Investopedia: Mortgage Payment Calculation, CFPB: Loan Calculator Principle
Variables Explained
- P (Initial Draw Amount): The principal amount you have drawn from your HELOC limit that is subject to repayment.
- r (Monthly Interest Rate): The annual percentage rate (APR) divided by 12 (i.e., $\text{APR} / 1200$).
- n (Number of Payments): The total number of payments in the repayment term (i.e., $\text{Repayment Term in Years} \times 12$).
- M (Monthly Payment): The estimated minimum required monthly payment for Principal and Interest during the repayment period.
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What is Home Equity Line of Credit Mortgage Calculator?
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home, similar to a credit card but using your home as collateral. Unlike a traditional mortgage that provides a lump sum, a HELOC allows you to withdraw funds as needed during a specified ‘draw period’ (typically 5 to 10 years). The interest rate is usually variable, tied to a benchmark index.
The ‘mortgage calculator’ function for a HELOC specifically focuses on the ‘repayment period.’ Once the draw period ends, the borrower typically enters a repayment phase (usually 10 to 20 years) where they must pay back the outstanding principal plus interest. This calculator estimates that mandatory minimum monthly payment using the standard amortization schedule based on the principal balance at the start of the repayment phase.
It is crucial to understand that HELOC terms can vary widely. Some plans require only interest payments during the draw period, while others require principal and interest. Always consult your loan agreement for the exact terms, as this tool provides an estimate only.
How to Calculate Home Equity Line of Credit Monthly Payment (Example)
Let’s calculate the monthly repayment for a $75,000 drawn amount with a 9% APR over a 10-year repayment term:
- Determine the Monthly Interest Rate ($r$): Divide the annual rate by 1200. $r = 9\% / 1200 = 0.0075$.
- Determine the Total Number of Payments ($n$): Multiply the term in years by 12. $n = 10 \times 12 = 120$ months.
- Calculate the Amortization Factor: Compute the expression $\left[ \frac{r(1+r)^n}{(1+r)^n – 1} \right]$. $$ \left[ \frac{0.0075(1+0.0075)^{120}}{(1+0.0075)^{120} – 1} \right] \approx 0.0126676 $$
- Calculate the Monthly Payment ($M$): Multiply the Draw Amount ($P$) by the Amortization Factor. $$ M = \$75,000 \times 0.0126676 \approx \$950.07 $$
- The estimated minimum monthly payment is **$950.07**.
Frequently Asked Questions (FAQ)
Is a HELOC payment fixed like a traditional mortgage?
No. A HELOC typically has a variable interest rate, meaning your monthly payment can fluctuate based on changes to the prime rate or other indices, even during the repayment phase.
What is the difference between the Draw Period and the Repayment Period?
The Draw Period is the time (usually 5-10 years) when you can access funds from the line of credit. The Repayment Period is the subsequent time (usually 10-20 years) when you cannot draw new funds and must pay back the outstanding principal balance plus interest.
Can I pay off my HELOC early?
Yes. HELOCs often allow for principal-only payments during the draw phase, and you can generally pay off the entire outstanding balance at any time without a prepayment penalty (though some lenders may charge closing fees if closed too soon).
Does this calculator include property taxes or insurance (PITI)?
No. This calculator estimates only the Principal and Interest (P&I) portion of the payment for the HELOC itself. Unlike a primary mortgage, HELOC payments do not typically include escrow for property taxes or homeowner’s insurance, which must be paid separately.