HELOC vs Home Equity Loan

Enter one amount and the terms of each loan to compare payments, total interest and loan-to-value side by side.

How to use ↓

HELOC vs home equity loan

Starting values are examples, not current rates or averages. Replace them with yours.

Step 1 What you need

Your setting.

Step 2 HELOC

Optional. Blank keeps the same rate.

Step 3 Home equity loan
Step 4 Calculate

How to use

  1. Enter the amount to borrow, your home value and your first mortgage.
  2. Enter the HELOC rate and periods.
  3. Enter the home equity loan rate and term.
  4. Press Calculate to see the two side by side.

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Comparing the two

Both borrow against your home equity. A home equity loan pays out once at a fixed rate with the same payment each month. A HELOC is a line of credit with an interest-only draw period and then repayment, and its rate usually changes.

The table shows the payment now and later, the total interest and the combined loan-to-value for each. The two loans run for different lengths of time, so total interest is not a like-for-like figure. Fees, annual charges and rate changes are not included.

This page compares numbers. It does not say which is right for you, and it does not show current rates.

Worked example

Borrowing $50,000. A HELOC at 8.5% with a 10-year draw period and 20-year repayment costs $354.17 a month at first (interest only), then $433.92. A home equity loan at a fixed 8% for 15 years costs $477.83 every month.

Total interest is $96,635.84 for the HELOC and $36,008.08 for the home equity loan, but the HELOC runs for 30 years and the loan for 15, so the two are not like for like. The rates are examples, and a real HELOC rate usually changes over time.

FAQ

Which one costs less?

It depends on the rates, terms and fees you are offered and, for a HELOC, on how the rate changes. Enter each and compare the table.

Why is the HELOC payment lower at first?

The draw period is usually interest only, so the payment does not pay down the balance. It rises when repayment starts.

Can the HELOC payment change?

Yes. HELOC rates usually change over time. This page uses the rate you enter for each phase.

Is my home at risk with either?

Yes. Both are secured by your home. If you cannot repay, you could lose it.