This free online Equity Line of Credit Loan Calculator will help you to compare lender credit limits for up to four different loan to value (LTV) ratios.
A Home Equity Line of Credit (HELOC) is an open ended loan taken out against the equity in your home. The size of the HELOC you qualify for depends on several factors, including your credit rating, the amount of equity you have in your home, and on the percentage of your home's value the lender is willing to lend.
The percentage of your home's value the lender is willing to lend out is often referred to as the lender's Loan to Value (LTV) ratio.
To calculate your HELOC, you first need to find out what the lender's LTV ratio is. You then multiply the value of your home by the LTV ratio -- which gives you the maximum loan amount on your home.
Next, total up all mortgages and liens against your home and subtract that total from the lender's maximum loan amount. The result is the HELOC you may qualify for.
Typically, once you take out a HELOC you will be required to make minimum monthly payments on the borrowed funds, equal to the amount of interest being charged per month. Any amounts you pay over and above the minimum payment will serve to lower the principal balance owed.
Most equity line of credit loans are set up to close after ten years, meaning the lender will expect all borrowed funds to be paid back at that time.
If you would like to calculate your home's current LTV ratio, please visit the Loan to Value Calculator.
With that, let's use the line of credit calculator to calculate your credit limits for up to four different lender loan to value ratios.
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Appraised value of property: The appraised value of your home. If you have not had your house appraised, research what homes similar to yours are selling for in your area. That should give you a good estimate of the appraised value.
Total of mortgages owed against property: The combined total of all mortgages and liens against your property.
Line of credit loan interest rate: The expected line of credit loan interest rate. Enter as a percentage (for .085, enter 8.5%). The line of credit loan calculator will use this percentage to calculate your minimum payment for each entered LTV Ratio -- assuming you borrowed the entire amount up front.
Lender Loan to value (LTV) ratio: The percentage of your home's value your lender is willing to loan to you. If your home is worth $200,000 and your lender's LTV Ratio is 80%, the maximum loan amount would be $160,000 (200,000 x .80), minus any mortgages and liens you already have against your home. So if you still owed $150,000 on your home, the line of credit you might qualify for would be $10,000 (160,000 - 150,000).
Max loan result row: This row contains the maximum loan amount for each entered LTV ratio.
Less loans result row: This row contains the total loans (mortgages and liens) against the property, which is the same for all entered LTV ratios.
Credit limit result row: This row contains the credit limit for each entered LTV ratio.
IO pmt result row: This row contains the monthly interest-only payment for each entered loan to value ratio -- assuming you borrowed the full amount up front. Interest-only payments are based on your entered annual interest rate and a 10-year line of credit.
Interest result row: This row contains the total of 10-years worth of interest-only payments for each entered LTV ratio.