Calculate your estimated monthly payment for a Home Equity Loan.
5%
15 years
Understanding Home Equity Loans and Your Monthly Payment
A Home Equity Loan is a type of loan where you borrow a lump sum of money against the equity you've built in your home. Your home equity is the difference between your home's current market value and the amount you still owe on your mortgage. These loans are often used for significant expenses like home renovations, debt consolidation, education costs, or medical bills.
The monthly payment for a home equity loan, like any installment loan, is determined by three primary factors: the loan amount, the interest rate, and the loan term (the duration over which you repay the loan). Our calculator helps you estimate this crucial monthly payment.
The Math Behind the Calculation:
The standard formula used to calculate the monthly payment (M) for an amortizing loan, such as a home equity loan, is as follows:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal loan amount (the total amount borrowed)
i = Monthly interest rate (Annual interest rate divided by 12)
n = Total number of payments (Loan term in years multiplied by 12)
Let's break down how the calculator uses your inputs:
Loan Amount: This is the 'P' in our formula. It's the total sum you wish to borrow.
Annual Interest Rate: This is the yearly percentage charged by the lender. For the calculation, it's converted into a monthly interest rate ('i') by dividing it by 12 and then by 100 (e.g., a 5% annual rate becomes 0.05 / 12 = 0.0041667 monthly).
Loan Term (Years): This is the duration of the loan. It's converted into the total number of payments ('n') by multiplying the number of years by 12 (e.g., a 15-year term results in 15 * 12 = 180 payments).
The formula then calculates the fixed monthly payment that will gradually pay down both the principal and the interest over the life of the loan.
When to Use a Home Equity Loan Calculator:
Budgeting for Renovations: Estimate how much a renovation project will cost you monthly.
Debt Consolidation: See the potential monthly savings or costs when consolidating high-interest debts.
Financial Planning: Understand the impact of borrowing against your home on your monthly cash flow.
Comparing Loan Offers: Use the calculator with different interest rates and terms to compare loan offers from various lenders.
Remember, this calculator provides an estimate. Your actual monthly payment may vary based on lender fees, specific loan terms, and your creditworthiness. Always consult with your lender for precise figures.
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function calculateLoan() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("result");
if (isNaN(loanAmount) || isNaN(interestRate) || isNaN(loanTerm) || loanAmount <= 0 || interestRate <= 0 || loanTerm 0) {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// Handle the case of 0% interest rate, though unlikely for a loan
monthlyPayment = loanAmount / numberOfPayments;
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if (isNaN(monthlyPayment) || !isFinite(monthlyPayment)) {
resultDiv.innerHTML = "Calculation error. Please check inputs.";
} else {
resultDiv.innerHTML = "$" + monthlyPayment.toFixed(2) + " / month";
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