This Home Equity Line of Credit (HELOC) calculator helps estimate how much you can borrow by utilizing the equity that you have in your home in Canada. A HELOC is a flexible line of credit that you can set up to have available when you need it.
What is a Home Equity Line of Credit (HELOC)?
A Home Equity Line of Credit is a type of loan which is secured against the equity the borrower has in their home. With a HELOC the lender will agree to lend you an amount based on the loan-to-value of your home. If you are looking to get a HELOC you should know the difference between the draw period and the repayment period.
Draw Period: This refers to the amount of time where you are eligible to withdraw funds from the HELOC. During this period you are only responsible for making interest payments on the amount of money that you have taken from the HELOC.
Repayment Period: This refers to the end of your draw period. At this time you must start to repay the outstanding balance of the amount borrowed in the HELCO. Payment will often be higher during this period as now you will be paying back both interest and principal.
A HELOC can be a good way to secure a loan to finance larger purchases such as home renovations or purchasing a car. If you are able to sercure a favourable rate on your HELOC it may be wise to use it as a way to consolidate debt by paying off higher-interest debt payments such as credit cards first.
What is the monthly payment on a $100,000 home equity line of credit?
Let’s work through an example to show how you can calculate your HELCO as well as how much your monthly payment would be on a $100K home equity line of credit (HELOC).