A Line of Credit is not a typical loan, where a lump sum is lent in advance. Instead, the lender provides a source of funds which is made available for when the borrower requires, and Interest is paid only on the money that the borrower withdraws.
The loans are called a Home Equity Line of Credit (HELOC). They are secured against the equity of an existing property you own, which becomes the collateral. Equity is calculated by subtracting the amount left to repay on your mortgage from the current market value of your home.
A HELOC is usually in the second-line position on your home, directly after your first mortgage. Home Equity Lines of Credit are usually open for a 10-year term, but this can vary between lenders. Each month, as a minimum, you will be required to make an interest only payment. However, in order to reduce and pay off the equity line balance you will need to repay more than the interest only payment each month. As with any loan, amounts paid above and beyond the interest payment will directly be deducted from the principal balance.

The calculator will also show the effects of making additional payments toward principal on a monthly, yearly or one-time basis. The "Principal Balances" chart shows the remaining balances owed every 12 months after the first additional payment. Click "view report" to see the full breakdown.


Why Use The Line of Credit Payments Calculator?

This Home Equity Line of Credit (HELOC) calculator will help you the interest payments that will be required during the initial phase of your HELOC. During this phase, known as the draw period, you may borrow against your line of credit and pay only the interest charges on the amount borrowed. The calculator will show the monthly interest payment for the total amount borrowed and interest rate.

The calculator will also show the effects of making additional payments toward principal on a monthly, yearly or one-time basis. The "Principal Balances" chart shows the remaining balances owed every 12 months after the first additional payment. Click "view report" to see the full breakdown.

How To Use The Line of Credit Payments Calculator

Not sure where to start? Let us help you:

  1. Input your outstanding balance (i.e. your positive equity amount)
  2. Fill in the interest rate you intend to pay
  3. Click Additional principal payments to expand the section, and type in how much you intend to pay each month or year towards the debt itself (as opposed to only the interest)
  4. The Principal Balances section will automatically update to display how many annual payments are required to pay off your loan
  5. Click Calculate to see the minimum monthly payment you should expect to make
  6. Click Get FREE Quote to reach out to providers of Home Equity Lines of Credit

Who is this Calculator for?

This calculator is most useful if you want ready access to a larger sum of money than a conventional loan or credit card can offer. Classic uses for Home Equity Lines of Credit include:

  • Home improvements
  • Medical bills
  • College education for children

This type of borrowing is not typically appropriate for day-to-day expenses.

What is a ‘principal’?

A principal, in the financial context, refers to a repayment amount which is not related or inclusive of interest or profit. It is relevant to the Line of Credit Payments Calculator as typically you will need to decide upon a principal to repay your lender, alongside your standard required interest-only repayments.

I have only had positive equity for a short time, can I get one of these?

Most lenders will insist that you have had a positive equity for a certain period of time (usually an amount of years) to ensure the security of the loan is based upon true value and not just a spike in the market.

That being said, there is absolutely no harm in asking, especially as here at MortgageLoan.com we do the hard part for you! Just click Get FREE Quote and the lenders you seek will come straight to you.

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