A Home Equity Line of Credit (HELOC) interest-only calculator is a simple, useful tool to help you budget for the costs of borrowing against your HELOC.
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An interest-only HELOC calculator allows you to estimate the cost of paying interest on your HELOC during the time where you’re paying only interest (and no principal) — the so-called “draw period”. You’ll also be able to see what your monthly payments will be after the draw period, when you’re paying both principal and interest.
A HELOC is a financial product that allows you access to a line of credit based on the equity you’ve built in your home over time. HELOCs are often available at relatively low interest rates. Assuming you have adequate income to handle making both a mortgage payment and a HELOC payment, you can have both a HELOC and a home mortgage loan.
This HELOC calculator allows you to gain a deeper insight into the overall cost of your credit line. To use it, simply enter the amount of your HELOC that you have used thus far, as well as the HELOC’s term in years, and the HELOC’s interest rate expressed as an APR. The calculator assumes you will make payments monthly.
Using the information you provide, the calculator will estimate your monthly interest-only payment.
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Some HELOCs allow you to pay only interest during the draw period, with payments against the principal kicking in later during the repayment period. This arrangement can allow borrowers access to cash at a low cost up-front, but can result in much larger payments composed of both principal and interest due further down the line.
This calculator will help you see how much your interest-only payment amounts to. If you were a first-time homebuyer when you purchased your home and you’ve never had a HELOC before, this can be especially helpful.
However, it’s important to understand that your payment amount may increase substantially during the HELOC’s repayment period. Furthermore, many HELOCs come with a variable interest rate, which means your rate — and therefore payments — may change over time.
A HELOC interest-only calculator helps you see how much your interest-only payments will cost each month, which can help you figure out whether or not you can afford to take out a HELOC (much the way a mortgage calculator or a home affordability calculator can help you determine your budget for buying a home).
If you already have a HELOC, the calculator can help you determine how much you can comfortably afford to draw on your credit line before the interest costs become challenging for your budget.
Along with offering borrowers access to cash at a relatively low cost, HELOCs are commonly used to fund home renovations or improvements — through 2025, interest paid on funds borrowed from a HELOC for these purposes are tax-deductible.
When repaid diligently, a HELOC may also help boost your credit score over time. And unlike many other forms of borrowing against home equity, with a HELOC, you only take out what you need too — which may help you avoid over-borrowing (and therefore paying more interest than necessary).
To qualify for a HELOC, you must own a home and have built up equity in it — which is to say, you must own some portion of your home’s value. For instance, if your house is worth $300,000 and you still owe $200,000 toward your mortgage principal, you probably have about $100,000 in equity (though you’ll want to check your mortgage’s specific amortization schedule for full details).
Additionally, when you take out a HELOC, the lender will review your credit score, cash flow, employment history, and other such financial factors that are usually part of a lending decision. (The process is similar to qualifying for a mortgage.) Most lenders will allow you to borrow up to 85% of what your home is worth, minus whatever you still owe on it.
You can begin the HELOC process with most lenders these days online. You’ll answer questions about both your financial standing and the property or properties you own (and whose equity you’re hoping to borrow against). Once you fill out the online application, you’ll be contacted by a representative of the company, who will walk you through the remaining steps in the preapproval process. This may involve a physical inspection or appraisal of your property — it’s a lot like the underwriting process for most types of mortgage loans.
Once your lender has fully approved your application and offered their terms, you’ll decide whether or not to accept the HELOC — and if so, sign the appropriate documentation. You’ll then have access to draw from the HELOC during the draw period, which is usually about 10 years long. The repayment period comes afterward, and may be up to 20 years.
Say your home is worth $500,000, and you own $300,000 worth of its equity. You choose to take out $150,000 against its value in a HELOC. Over the course of the HELOC, you’ll pay back not only whatever portion of that $150,000 credit line you use, but also whatever interest is accrued over the draw and repayment periods. Keep in mind that if you opt for an interest-only draw period, your payments during the repayment period will likely be substantially larger.
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In order to successfully apply for a HELOC, be sure you’re in good financial standing. If you have high levels of outstanding debt or a poor credit score, you may not qualify for a HELOC, or you may qualify only for an expensive high interest rate. The process of applying for a HELOC is similar to applying for a mortgage or a mortgage refinance.
Additionally, consider the purpose of the HELOC. While some projects, like home improvement, may be worth going into debt for, taking out a HELOC to fund a wedding or vacation might not make financial sense in the long run. A HELOC isn’t the only solution if you need to borrow against your home and a home loan help center can help you explore your options.
A HELOC can be a relatively low-cost way for homeowners to access the equity they’ve worked hard to build in the form of cold, hard cash. But in order to understand how much you might need to pay each month in interest, it helps to use a HELOC interest-only calculator.
SoFi now offers flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively low rates. And the application process is quick and convenient.
Unlock your home’s value with a home equity line of credit brokered by SoFi.
Given how complex interest calculations can be, the best way to calculate an interest-only HELOC payment is to utilize an interest-only HELOC calculator, which will do the math for you.
Not necessarily. While interest-only payments may make money from a HELOC more accessible in the short term (since payments will be lower), it’s important to understand that, later on during the repayment period, those payments will dramatically increase. To lower your overall HELOC cost, consider paying principal throughout the HELOC’s lifetime.
Interest-only payment calculations depend on amortization. Your lender could provide you with a full amortization schedule, but an interest-only calculator can quickly give you a good estimate.
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