Calculate your estimated monthly interest-only payment for a Home Equity Line of Credit (HELOC).
Your Estimated Monthly Interest-Only Payment:
Understanding HELOC Interest-Only Payments
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home, similar to a credit card. It allows you to borrow funds as needed up to a certain limit. During the initial "draw period," you typically have the option to make only interest payments. This calculator helps you estimate those minimum monthly interest payments.
How the Calculation Works
The interest-only payment is calculated based on the outstanding balance of your HELOC and the current interest rate. The formula is straightforward:
Outstanding HELOC Balance: The total amount you have borrowed from your HELOC at a given time.
Annual Interest Rate: The yearly interest rate on your HELOC, expressed as a decimal (e.g., 7.5% becomes 0.075).
12: Represents the number of months in a year.
Example Calculation
Let's say you have a HELOC with the following details:
HELOC Amount Drawn: $75,000
Annual Interest Rate: 8.0%
Using the formula:
Monthly Interest Payment = ($75,000 * 0.08) / 12
Monthly Interest Payment = $6,000 / 12
Monthly Interest Payment = $500
In this scenario, your estimated monthly interest-only payment would be $500.
Key Considerations for Interest-Only HELOC Payments:
Draw Period vs. Repayment Period: Interest-only payments are typically only an option during the draw period (usually 5-10 years). After this, you enter the repayment period, where you'll pay both principal and interest, leading to higher payments.
Variable Rates: Most HELOCs have variable interest rates, meaning your monthly payment can increase or decrease as market rates change.
Principal is Still Owed: Making only interest payments does not reduce your principal balance. You will still owe the full amount borrowed.
Long-Term Costs: While lower monthly payments during the draw period can help with cash flow, you'll end up paying more interest over the life of the loan compared to paying down principal.
Risk: Using your home as collateral means default could lead to foreclosure.
This calculator provides an estimate for educational purposes. Always consult with your lender for precise payment details and terms specific to your HELOC agreement.
function calculateHELOCPayment() {
var helocAmount = parseFloat(document.getElementById("helocAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var resultDiv = document.getElementById("result");
var monthlyPaymentValueSpan = document.getElementById("monthlyPaymentValue");
if (isNaN(helocAmount) || isNaN(annualInterestRate) || helocAmount <= 0 || annualInterestRate < 0) {
alert("Please enter valid numbers for HELOC Amount and Annual Interest Rate.");
resultDiv.style.display = 'none';
return;
}
var monthlyInterestRate = annualInterestRate / 100 / 12;
var monthlyPayment = helocAmount * monthlyInterestRate;
// Format to 2 decimal places for currency
monthlyPaymentValueSpan.textContent = "$" + monthlyPayment.toFixed(2);
resultDiv.style.display = 'block';
}