Equity Mortgage Calculator
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padding: 30px;
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.input-group input[type="text"] {
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Your Estimated
—
Estimated Monthly Payment
Understanding Your Equity Mortgage and its Calculation
An equity mortgage, often referred to as a home equity loan or a home equity line of credit (HELOC), allows homeowners to borrow against the equity they have built in their home. Equity is the difference between your home's current market value and the amount you still owe on your mortgage. For instance, if your home is worth $500,000 and you owe $300,000 on your mortgage, you have $200,000 in home equity.
This calculator helps you estimate the monthly payments for a new loan (equity mortgage) you might take out using your home's equity. It takes into account the desired loan amount, the interest rate, and the repayment term.
How the Equity Mortgage Payment is Calculated:
The core of this calculation is the standard mortgage payment formula, which determines the fixed monthly payment needed to amortize a loan over its term. The formula is as follows:
$M = P \frac{r(1+r)^n}{(1+r)^n – 1}$
Where:
- M = Your total monthly mortgage payment.
- P = The principal loan amount (the amount you are borrowing).
- r = Your monthly interest rate. This is your annual interest rate divided by 12. (e.g., if the annual rate is 6.5%, r = 0.065 / 12).
- n = The total number of payments over the loan's lifetime. This is the loan term in years multiplied by 12. (e.g., for a 15-year loan, n = 15 * 12 = 180).
Calculator Inputs Explained:
- Current Home Value: The estimated current market price of your property.
- Outstanding Mortgage Balance: The total amount you still owe on your primary mortgage.
- Desired Loan Amount: The specific amount you wish to borrow against your home equity. This should not exceed your available equity (Home Value – Outstanding Mortgage Balance).
- Annual Interest Rate: The yearly percentage charged by the lender on the loan.
- Loan Term (Years): The duration over which you agree to repay the loan.
Using This Calculator:
To use the calculator, simply enter the values for your current home value, your outstanding mortgage balance, the amount you wish to borrow (your desired equity loan amount), the annual interest rate, and the term in years. Clicking "Calculate Monthly Payment" will provide an estimate of your fixed monthly payment for this new equity loan. This helps you budget and understand the ongoing costs associated with tapping into your home equity.
Important Considerations:
Remember that this calculation provides an estimate. Actual loan terms, fees, and payments may vary depending on the lender, your creditworthiness, and current market conditions. It's crucial to consult with financial institutions and advisors to get precise quotes and understand all the terms and conditions before committing to an equity mortgage.
function calculateEquityMortgage() {
var homeValue = parseFloat(document.getElementById("homeValue").value);
var outstandingMortgage = parseFloat(document.getElementById("outstandingMortgage").value);
var desiredLoanAmount = parseFloat(document.getElementById("desiredLoanAmount").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var resultElement = document.getElementById("result");
resultElement.style.color = "#333"; // Reset color
resultElement.style.backgroundColor = "#d4edda"; // Default success color
resultElement.style.borderColor = "#c3e6cb"; // Default success border
if (isNaN(homeValue) || homeValue <= 0 ||
isNaN(outstandingMortgage) || outstandingMortgage < 0 ||
isNaN(desiredLoanAmount) || desiredLoanAmount <= 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(loanTerm) || loanTerm availableEquity) {
resultElement.textContent = "Desired loan amount exceeds available equity.";
resultElement.style.color = "red";
resultElement.style.backgroundColor = "#f8d7da";
resultElement.style.borderColor = "#f5c6cb";
return;
}
var principal = desiredLoanAmount;
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var monthlyPayment = 0;
if (monthlyInterestRate > 0) {
monthlyPayment = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else { // Handle 0% interest rate case
monthlyPayment = principal / numberOfPayments;
}
if (isNaN(monthlyPayment) || monthlyPayment === Infinity || monthlyPayment < 0) {
resultElement.textContent = "Calculation error. Please check inputs.";
resultElement.style.color = "red";
resultElement.style.backgroundColor = "#f8d7da";
resultElement.style.borderColor = "#f5c6cb";
} else {
resultElement.textContent = "$" + monthlyPayment.toFixed(2);
}
}