Calculate how much you can borrow against your home equity.
Monthly payment = P × [r(1 + r)^n] ÷ [(1 + r)^n − 1]
P = principal, r = periodic interest rate, n = number of payments.The calculator applies the entered principal or balance, periodic interest rate, repayment term and any supported fees or extra payments. Payment and interest figures depend on compounding frequency, payment timing and which taxes, insurance or charges are included.
The Home Equity Loan Calculator will calculate what your monthly payment and total repayment for a home equity loan may look like, based on the amount you wish to borrow, interest rate and repayment period. Simply input the amount of the home equity loan you need, the annual interest rate you will be offered, and the length of time in years which you wish to repay the loan. This estimation of what your payment could be will allow you to compare payment plans before investigating actual offers and loans which could be supplemented with other fees, such as taxes, insurance or lender fees.
Enter the rate and loan term from an offer received from a specific lender (use the real loan information whenever possible). If the intended loan amount is not actually the house price, do not enter it in the loan amount field.
A home equity loan calculator calculates loan payments over a specified amount of time and uses three points-loan amount, loan interest rate and the amount of payment-which calculates how each payment will be in fixed dollar amounts. In an installment loan, such as the standard loan of equal periodic payments of both principal and interest (the most prevalent type), each periodic loan payment you make pays down on what the homeowner still owes.
It can also be used for scenario analysis, with you able to change: • loan amount • interest rate • term - each change demonstrating an immediate impact on the projected monthly payment and total interest paid.
For a standard fixed-rate loan with monthly payments, the estimated monthly payment can be calculated using:
M = P × r × (1 + r)n ÷ ((1 + r)n − 1)
The estimated total interest over the full repayment period can be calculated as:
Total Interest = (Monthly Payment × Number of Payments) − Loan Principal
The formulas above represent and typical amortizing loan and standard, equal monthly payments and do not in any way, by default, attempt to factor in Lender Fees, late payments, insurance, or any other types of expenses unless these expenses are factored into the calculator.
Suppose a homeowner wants to borrow $50,000 through a fixed-rate home equity loan at an annual interest rate of 8% for 10 years.
Using the standard amortization formula, the estimated monthly payment is approximately $606.64.
In this example, you're seeing why both the payment and the interest are important. While extending the time frame the loan is paid back over may result in a smaller monthly payment, an longer payoff duration is usually more costly over the life of the loan.
The estimated monthly payment is the principle and interest portion based on the inputs into the calculator. It should not be automatically assumed to be the entire cost of the loan, since fees and charges may apply when borrowing a true home equity loan.
| Variable | If Increased | Typical Effect on Payment |
|---|---|---|
| Loan amount | More money borrowed | Higher payment |
| Interest rate | Higher borrowing rate | Higher payment and interest cost |
| Loan term | More repayment months | Usually lower monthly payment but potentially higher total interest |
When comparing different scenarios, if you can, change one variable at a time. If it's clear from that whether the payment, increase or decrease is from the amount, rate or term.
Home equity is the difference between a property's current value and the outstanding balance of loans secured by the property.
Home Equity = Home Value − Outstanding Mortgage Debt
Say your house has a value of $400,000 and you owe $280,000 on your mortgage balance. That leaves you with $120,000 in home equity. The amount in home equity ($120,000 in this case) does not directly equal the amount you may have borrowed. The total amount borrowed through a home equity loan varies and is dependent on the assessment made by the lender, the house itself, any debt you hold, your credit standing, and loan terms in effect.
So too can the repayment period drastically effect the trade-off between the monthly payment and the total cost of borrowing. Take for instance that same $50,000 loan at 8% and change repayment periods:
| Loan Term | Approximate Monthly Payment |
|---|---|
| 5 years | $1,013.82 |
| 10 years | $606.64 |
| 15 years | $477.82 |
| 20 years | $418.22 |
Here are two tables. They both reflect the situation of interest against loan length when the payment size is altered, or vice versa. It shows the reality of the compromise between amount paid on one go and length of period of paying back, as well as an additional table with actual over total interest of each case. One should weigh the actual over total against monthly payment rather than selecting the length period according solely on minimum monthly repayment value.
When loan amount and repayment time is fixed, usually larger interest rate will give larger monthly payment and much more interests amount for the loan in life of loan.
| Annual Rate | Loan Amount | Interest-Only Monthly Interest |
|---|---|---|
| 6% | $50,000 | $250.00 |
| 7% | $50,000 | $291.67 |
| 8% | $50,000 | $333.33 |
| 9% | $50,000 | $375.00 |
| 10% | $50,000 | $416.67 |
The interest shown on the above chart is the result of a basic interest-only payment that is not the same as the full amortization payment calculated by the Home Equity Loan Calculator.
The lender may not include all costs in their loan principal-and-interest estimate as part of your overall loan cost. Depending on the loan and the lender, your total cost may also include origination, appraisal and title fees as well as closing costs and other fees.
When you receive an estimated calculator output and compare it with the quote from a lender, determine if their quoted payment is purely principal and interest or if other charges are billed separately.
How a home equity loan calculator works The calculator’s inputs range from the loan amount, interest rate and term. Depending on the calculator used, the information you get will also range from exact numbers to an estimate.
Payment amount varies with interest rate and term. For example, the monthly interest and P.I. Portion is calculated to be $606.64 on $50,000 at 8 percent for 10 years.
For example, on most installment loans, it is typical that longer the term, the more it will stretch out the balance to many payments; allowing for smaller payments. However, keeping the loan for the longer period of time increases the over all interest paid.
Yes and no. A loan calculator can tell you the cost of a specific loan amount, but what a loan can offer is determined by the size, existing debt, location, property value, income and good standing of each applicant.
Only if the calculator has specified fields for that cost. Normal payment calculation just looks at P&I so actual borrowing cost will be higher.
Standard amortization formulas work the same way for each product, but amounts, terms, rates, fees and contract terms are different. Home equity loan: This loan is collateralized with an equity in an existing house.
Enter the expected amount, rate and term, calculate a base case, then increase the rate or shorten the term. Compare the monthly payment and total interest to understand the trade-off between cash flow and borrowing cost.
Small changes to the amount being borrowed make a big difference in what your estimated monthly payments are. For instance, the interest-only calculation for different balances at an 8% annual interest rate are illustrated as follows:
| Loan Balance | Annual Rate | Approximate Monthly Interest |
|---|---|---|
| $25,000 | 8% | $166.67 |
| $50,000 | 8% | $333.33 |
| $75,000 | 8% | $500.00 |
| $100,000 | 8% | $666.67 |
These are monthly interest-only estimates and are not a P&I repayment schedule for a typical home equity loan. To estimate a payment including principal and interest, select your repayment term within the calculator.
An additional home equity loan to an existing equity loan will make your principal higher; hence the amount of interest calculated on it. This will usually translate to a higher monthly payment and overall total interest when your interest rate and payment period are the same.
The bigger you make a loan, say from $50k to $60k with the same rate and term, you pay more simply because you borrowed an extra $10k in principal:
You could put an extra amount into principal to pay off balance earlier and therefore maybe cut down on interest over term. This also depends on your loan documents.
While testing this, ensure you use the original payment schedule and apply the same figure to the additional payment option. Some calculators simply will not have a designated additional payment section for early payoff and in such a case, you should not use their generated payoff for your final loan payment results.
Home equity is not the same as the home equity loan total. Your equity is how much value the home has left in it after your mortgage is paid off.
| Item | Example |
|---|---|
| Home value | $400,000 |
| Existing mortgage balance | $280,000 |
| Estimated home equity | $120,000 |
| Potential new loan amount | Depends on the lender and borrower |
The example shows that the home-owner is not necessarily entitled to borrow $120,000 because borrowing limits are determined by individual lenders, based on property appraisal, debt on loan, etc.
With this, we can quickly understand what part of the difference in payment is due to difference inloan amount, interest rate and repayment period.
With this, we can quickly understand what part of the difference in payment is due to difference inloan amount, interest rate and repayment period.
Total Interest = Total Scheduled Payments − Original Principal
For example, if the total payoff for a $50,000 loan carrying $606.64 per month payment over 120 months is roughly $72,797, it means that there will be around $22,797 due in interest as compared to the $50,000 principle, not including other service fees or charges.
Final Lender Quote vs. Calculator may differ because the Lender's definition of some Terms might be different than the calculator's or there are fees incorporated into the lender's quote, which are not added to the calculator. Variations in terms may be seen with the eventual rate, amount financed, payment term, costs added, rounding, or other contract specifications.
Thus, use the calculator for estimates and comparisons with potential scenarios, rely on lender disclosures and loan document for actual amount and payment.