Understanding the home equity loan calculator
A home equity loan lets you borrow against the value you've built in your home, receiving a lump sum repaid at a fixed rate over a set term effectively a second mortgage. Lenders cap total borrowing at a combined loan-to-value ratio, commonly 80 to 90%: your existing mortgage plus the new loan can't exceed that share of the home's value.
Because the loan is secured by your house, rates are far lower than credit cards or personal loans but the house is collateral, so falling behind risks foreclosure. Home equity loans suit large, one-time expenses with a known cost, such as a renovation or debt consolidation; for ongoing or uncertain needs, a HELOC's revolving credit line is often the better fit.
Results are estimates for education only and are not financial advice.