🏦 HELOC Calculator

A HELOC (Home Equity Line of Credit) is a revolving credit line secured by your home equity. Like a credit card — but secured by your home: - Borrow up to your credit limit during draw period - Pay back and borrow again (revolving) - Variable interest rate (usually Prime + margin) - Your home is collateral

Step 1: Calculate your home equity Equity = Home Value - Mortgage Balance Step 2: Apply lender CLTV limit (typically 80-85%) Max CLTV = Home Value x 85% Max HELOC = (Home Value x 85%) - Mortgage Balance Example: Home Value: $550,000 Mortgage: $320,000 Max at 85% CLTV: $550,000 x 85% = $467,500 Max HELOC: $467,500 - $320,000 = $147,500

Monthly Interest = Balance x (Rate / 12) Example: $80,000 at 8.5% Monthly Interest = $80,000 x (8.5% / 12) = $80,000 x 0.007083 = $566.67/month During draw period, minimum payment = interest only. You can pay more to reduce principal. Balance stays at drawn amount if only interest paid.

At end of draw period: - No new draws allowed - Balance fully amortises over repayment period Monthly P&I = Balance x [r(1+r)^n] / [(1+r)^n - 1] Where r = monthly rate, n = repayment months Payment shock example: Draw period (interest-only): $566/month Repayment period (P&I 20yr): $693/month Payment increase: +$127/month (+22%)

HELOCs are typically Prime Rate + Margin Prime Rate (May 2025): ~8.50% Typical HELOC margin: 0% to 2% If Prime rises +2%: Current payment: $566/month After +2% rate: $700/month (+24%) To manage rate risk: - Make extra principal payments during draw period - Some lenders offer rate lock on portion of balance - Consider fixed-rate home equity loan instead