Reviewed by: David Chen, CFA
David Chen is a Certified Financial Analyst with over 10 years of experience in finance, offering expert advice on home loans and real estate investment.
David Chen is a Certified Financial Analyst with over 10 years of experience in finance, offering expert advice on home loans and real estate investment.
Enter the necessary values to calculate your home equity loan interest-only payments. This tool helps you estimate monthly payments based on your loan amount and interest rate.
Home Equity Loan Interest Only Payments Calculator
Home Equity Loan Formula
Monthly Payment = (Loan Amount × Interest Rate) / 12
Formula Source: Investopedia
Variables:
- Loan Amount: The total amount of the home equity loan.
- Interest Rate: The annual interest rate for the loan.
- Loan Term: The term of the loan in years.
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What is a Home Equity Loan?
A home equity loan allows homeowners to borrow against the equity in their home. Typically, these loans have lower interest rates than personal loans and credit cards because they are secured by the value of the property.
How to Calculate Home Equity Loan Payments (Example)
- Step 1: Enter the loan amount, interest rate, and loan term in years.
- Step 2: Click “Calculate” to determine your monthly interest-only payment.
Frequently Asked Questions (FAQ)
How does the interest-only loan work? With an interest-only loan, you pay only the interest during the initial years, after which principal payments begin.
Can I pay down the principal early? Yes, you can usually make extra payments towards the principal to reduce the total loan balance and interest costs.