Home Equity Loan Amortisation Calculator
Understand your monthly payments, total interest, and see when you cross the break-even point after closing costs.
Additional Information and Definitions
Loan Amount
The total amount borrowed against your home's equity.
Annual Interest Rate (%)
The yearly percentage cost of borrowing. Enter a simple figure such as 5 for 5%.
Term (Months)
How many months until the loan is fully paid. Example: 120 months = 10 years.
Closing Costs
Additional fees for processing the loan, like appraisal or origination charges.
Capitalize on Home Equity
Take a careful look at how monthly payments and fees accumulate.
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Key Terms for Home Equity Loans
These definitions help clarify the maths behind your monthly payments and break-even point.
Loan Amount:
The borrowed total that uses your home equity as collateral, typically lower in interest than unsecured loans.
Term:
The duration over which monthly payments must be made. Longer terms can reduce monthly cost but increase total interest.
Closing Costs:
Upfront fees to finalise the loan process, including title checks and administrative charges.
Break-Even Month:
The month in which your principal repayment surpasses the closing costs, meaning you effectively offset the initial fees.
Amortisation:
A structure where each payment gradually reduces principal and covers interest according to a schedule.
Monthly Payment:
The sum you pay every month. It comprises an interest portion and a principal portion to chip away at the balance.
5 Things You Might Not Know About Home Equity Loans
Home equity loans have distinct perks and pitfalls. Here are five interesting insights you might find surprising.
1.They Can Fund Big Projects
A home equity loan is a popular way to finance significant renovations or education costs. Borrowing against your home can be cheaper than some unsecured debts.
2.Closing Costs Are Real
Unlike personal loans that might skip large fees, home equity loans often have them. Plan for these up front to avoid surprises at the signing table.
3.Secured Means Lower Rate
Since your home is collateral, rates can be lower than other loans. However, missing payments risks foreclosure, so it's important to budget carefully.
4.You Can Refinance Later
If rates drop or your credit improves, refinancing might save you money. Always check if it offsets the new closing costs involved.
5.Break-Even Calculations Matter
Wondering when your up-front fees pay for themselves? A break-even month analysis helps see the bigger picture of total savings.