10-year Fixed Rate Mortgage Calculator

HELOC (Home Equity Line of Credit) Calculator

Your Estimated HELOC Limit:

$0.00

function calculateHELOC() { var homeValue = parseFloat(document.getElementById("homeValue").value); var mortgageBalance = parseFloat(document.getElementById("mortgageBalance").value); var cltvRatio = parseFloat(document.getElementById("cltvRatio").value) / 100; var resultArea = document.getElementById("resultArea"); var helocResult = document.getElementById("helocResult"); var equityBreakdown = document.getElementById("equityBreakdown"); if (isNaN(homeValue) || isNaN(mortgageBalance) || isNaN(cltvRatio) || homeValue <= 0) { alert("Please enter valid positive numbers for all fields."); return; } // Calculation: (Home Value * Max LTV) – Mortgage Balance var maxBorrowingPower = homeValue * cltvRatio; var availableHELOC = maxBorrowingPower – mortgageBalance; if (availableHELOC < 0) { availableHELOC = 0; } resultArea.style.display = "block"; helocResult.innerText = "$" + availableHELOC.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); equityBreakdown.innerHTML = "Based on a " + (cltvRatio * 100).toFixed(0) + "% Loan-to-Value, your maximum combined debt is $" + maxBorrowingPower.toLocaleString() + ". Subtracting your current mortgage of $" + mortgageBalance.toLocaleString() + " leaves you with this estimated credit line."; }

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Understanding Your Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit, or HELOC, is a revolving line of credit that allows homeowners to borrow against the equity they have built in their property. Unlike a standard home equity loan, which provides a lump sum, a HELOC works similarly to a credit card—you borrow what you need, when you need it, up to a specific limit.

How Does This HELOC Calculator Work?

Lenders typically determine your HELOC limit based on a metric called the Combined Loan-to-Value (CLTV) ratio. Most banks allow for a CLTV between 80% and 90%. The formula used in this calculator is:

(Home Value × Max LTV Percentage) – Current Mortgage Balance = HELOC Limit

A Realistic Example

Suppose your home is currently valued at $450,000. You still owe $250,000 on your primary mortgage. Your lender allows for an 85% CLTV ratio.

• Step 1: Calculate max borrowing capacity ($450,000 × 0.85) = $382,500.
• Step 2: Subtract existing debt ($382,500 – $250,000) = $132,500.
• Your HELOC Limit: $132,500

Why Use a HELOC?

HELOCs are popular for homeowners because they offer flexibility and often carry lower interest rates than personal loans or credit cards. Common uses include:

• Home Renovations: Increasing the value of the asset used as collateral.
• Debt Consolidation: Paying off high-interest credit cards with a lower-interest line of credit.
• Emergency Fund: Having a safety net for major unexpected expenses.
• Education Costs: Funding tuition or professional development.

Important Considerations

While a HELOC offers great utility, remember that your home serves as collateral. If you are unable to make payments during the repayment period, you risk foreclosure. Additionally, HELOCs usually feature variable interest rates, meaning your monthly payments can fluctuate based on market conditions (the Prime Rate).