Investment Mortgage Rates Calculator

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HELOC Payment Calculator

Interest-Only Payment (Draw Period) Principal + Interest (Repayment Period)

Estimated Monthly Payment

$0.00

function calculateHELOC() { var balance = parseFloat(document.getElementById('heloc_balance').value); var rate = parseFloat(document.getElementById('heloc_rate').value) / 100; var termYears = parseFloat(document.getElementById('heloc_term').value); var type = document.getElementById('heloc_type').value; var resultDiv = document.getElementById('heloc_result_box'); var output = document.getElementById('heloc_payment_output'); var breakdown = document.getElementById('heloc_breakdown'); if (isNaN(balance) || isNaN(rate) || isNaN(termYears) || balance <= 0) { alert('Please enter valid numerical values.'); return; } var monthlyRate = rate / 12; var payment = 0; if (type === 'interest_only') { payment = balance * monthlyRate; breakdown.innerHTML = "This calculation covers interest only. Your principal balance of $" + balance.toLocaleString() + " will remain unchanged."; } else { var totalMonths = termYears * 12; payment = balance * (monthlyRate * Math.pow(1 + monthlyRate, totalMonths)) / (Math.pow(1 + monthlyRate, totalMonths) – 1); breakdown.innerHTML = "This monthly payment will pay off your balance and interest over " + termYears + " years."; } output.innerHTML = "$" + payment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); resultDiv.style.display = 'block'; }

Understanding Your HELOC Monthly Payments

A Home Equity Line of Credit (HELOC) is a unique financial tool that functions differently than a standard mortgage or personal loan. Because it is a revolving line of credit, your payments can fluctuate based on your current balance, the prevailing interest rate, and whether you are in the draw period or the repayment period.

The Draw Period vs. The Repayment Period

Most HELOCs are divided into two distinct phases:

  • The Draw Period: Typically the first 5 to 10 years. During this time, you can borrow money up to your credit limit. Most lenders only require interest-only payments during this phase, which keeps monthly costs low but does not reduce the debt you owe.
  • The Repayment Period: Once the draw period ends (usually after 10 years), you can no longer borrow money. You enter the repayment phase (often 10 to 20 years), where your monthly payment increases to include both principal and interest to ensure the loan is fully paid off by the end of the term.

How Interest is Calculated

HELOCs usually feature variable interest rates tied to an index like the U.S. Prime Rate. This means your payment can change even if your balance stays the same. The basic formula for an interest-only payment is:

(Current Balance × Annual Interest Rate) / 12 Months = Monthly Interest Payment

Example Calculation

Let's look at a realistic scenario for a homeowner using a HELOC for a kitchen renovation:

  • HELOC Balance: $30,000
  • Interest Rate: 9.0% (APR)
  • Phase: Interest-Only Draw Period

In this case, the calculation would be: ($30,000 × 0.09) / 12 = $225.00 per month. Once this homeowner enters the repayment period with a 20-year term, the payment would jump to approximately $269.91 to begin paying down the $30,000 principal.

Why Use a HELOC Calculator?

Using a HELOC calculator helps you prepare for "payment shock." Many homeowners are surprised by how much their payments increase when the draw period ends. By calculating your principal and interest payments ahead of time, you can budget effectively and decide if it's better to start making voluntary principal payments early to save on long-term interest costs.

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