This **Mortgage Line of Credit (MLOC) Calculator** helps you determine the necessary monthly payment, the total loan term, or the principal balance based on the standard amortization schedule. Simply enter three of the four key variables to solve for the missing one.
Mortgage Line of Credit Calculator
Calculated Result:
Mortgage Line of Credit Calculator Formula
The calculation relies on the standard Amortization Payment Formula, solving for the missing variable:
M = P [ i(1 + i)^n / ((1 + i)^n - 1) ]
Where:
- M = Monthly Payment
- P = Principal Outstanding Balance
- i = Monthly Interest Rate (APR / 1200)
- n = Total Number of Payments (Term in Months)
Formula Sources: Investopedia (Amortization), Bankrate (Calculator Methodology)
Variables Explanation
- Current Outstanding Balance (P): The principal amount currently drawn against your line of credit. If calculating for a new loan, this is the initial loan amount.
- Annual Interest Rate (APR): The yearly interest rate, expressed as a percentage. MLOC rates are often variable.
- Remaining Term in Months (n): The total number of monthly payments remaining until the balance is paid off.
- Monthly Minimum Payment (M): The fixed minimum amount paid monthly (excluding any extra principal payments).
Related Calculators
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- Debt Consolidation Savings Calculator
- Interest-Only Loan Calculator
What is Mortgage Line of Credit Calculator?
A Mortgage Line of Credit (MLOC), often synonymous with a Home Equity Line of Credit (HELOC), is a revolving credit facility secured by your home’s equity. Unlike a traditional mortgage, you only accrue interest on the amount you actually draw, and the credit limit replenishes as you pay down the principal. This calculator specifically models the repayment phase of an MLOC based on a fixed amortization schedule for the current outstanding balance.
This tool is essential for financial planning. Because MLOCs often have variable interest rates, being able to quickly model the impact of a rate change (solving for M) or determine the remaining term (solving for n) helps homeowners manage their debt load and budget effectively. It moves beyond simple interest calculation to provide a full amortization view.
How to Calculate Mortgage Line of Credit (Example)
- Identify Known Variables: Assume you have an outstanding balance (P) of $100,000, an APR of 6.0% (i.e., monthly rate i = 0.005), and a remaining term (n) of 180 months (15 years).
- Goal: Solve for the Monthly Payment (M).
- Calculate the Numerator: First, calculate $(1 + i)^n$: $(1 + 0.005)^{180} \approx 2.454$.
- Apply the Formula: Substitute all values into the amortization formula: $M = 100,000 \times [ 0.005 \times 2.454 / (2.454 – 1) ]$.
- Final Payment Calculation: $M = 100,000 \times [ 0.01227 / 1.454 ] \approx 100,000 \times 0.008438$.
- Result: The required Monthly Minimum Payment (M) is approximately $843.86.
Frequently Asked Questions (FAQ)
Is an MLOC always interest-only?
No. While the draw period of many MLOCs allows for interest-only payments, the repayment phase typically requires both principal and interest payments to fully amortize the balance over the remaining term. This calculator models the amortization phase.
Can I solve for the APR?
Yes. Since the APR is embedded in the monthly interest rate ($i$), the calculator uses an iterative numerical method (like the Newton-Raphson method) to accurately solve for the unknown interest rate when P, n, and M are known.
What happens if I enter all four values?
The calculator performs a consistency check. It uses the first three values (P, APR, n) to calculate the theoretical monthly payment (M) and compares it against the M you entered. If they differ significantly, it will display a warning about mathematical inconsistency.
Does this calculation include property taxes or insurance?
No. The monthly payment (M) calculated here is purely the principal and interest payment required to amortize the loan balance. It does not include escrow amounts for taxes, insurance, or any associated MLOC fees.