Compare HELOC vs Home Equity Loan
Understand the differences and calculate payments for both options to make an informed decision.
HELOC Loan Calculator - Compare Your Options
Choosing between a Home Equity Line of Credit (HELOC) and a traditional home equity loan can be confusing. Our HELOC loan calculator helps you understand both options by comparing their payment structures, total costs, and flexibility. Get side-by-side comparisons to see which financing option best fits your needs.
HELOC vs Home Equity Loan: What's the Difference?
While both products allow you to borrow against your home's equity, they work very differently:
🏦 HELOC (Line of Credit)
- Revolving credit - Borrow, repay, borrow again
- Variable rate - Rate changes with market
- Two phases - Draw period + Repayment period
- Interest-only option - Lower initial payments
- Flexible borrowing - Only use what you need
🏡 Home Equity Loan
- Lump sum - Get all money upfront
- Fixed rate - Rate never changes
- One phase - Principal + interest from day 1
- Predictable payments - Same payment every month
- Closed-end - One-time borrowing
Compare HELOC vs Home Equity Loan Payments
Use our calculator to see how each option would work with your specific numbers. Enter your information once and see both scenarios side-by-side.
HELOC vs Loan Calculator
🏦 HELOC Results
Draw Period Payment: $354.17/mo
(Interest-only for 10 years)
Repayment Period Payment: $505.84/mo
(Principal + Interest for 15 years)
Total Interest Paid: $51,550
Over 25-year term
🏡 Home Equity Loan Results
Monthly Payment: $507.13/mo
(Fixed for entire 15-year term)
�?Payment never changes
�?Rate locked in
Total Interest Paid: $41,283
Over 15-year term
💡 Based on these rates, a Home Equity Loan would save you $10,267 in total interest.
*Estimates are for comparison purposes only. Actual rates, terms, and payments may vary by lender.
When to Choose Each Option
Choose a HELOC if you:
- Need access to funds over time (e.g., ongoing home renovation)
- Aren't sure exactly how much you'll need
- Want flexibility to borrow, repay, and borrow again
- Are comfortable with variable interest rates
- Can handle potential payment increases
- Expect interest rates to stay stable or decrease
Choose a Home Equity Loan if you:
- Need a specific lump sum for a one-time expense
- Want predictable, fixed monthly payments
- Prefer to lock in today's interest rate
- Want a simpler payment structure
- Are planning budgets years in advance
- Expect interest rates to rise in the future
Frequently Asked Questions
What is the difference between a HELOC and a home equity loan?
A HELOC (Home Equity Line of Credit) is a revolving line of credit that works like a credit card, allowing you to borrow, repay, and borrow again during the draw period. A home equity loan provides a lump sum upfront with fixed monthly payments over a set term. HELOCs typically have variable interest rates and two payment phases, while home equity loans have fixed rates and consistent payments.
Which is better: HELOC or home equity loan?
It depends on your needs. Choose a HELOC if you need ongoing access to funds, want flexibility in borrowing, and are comfortable with variable rates. Choose a home equity loan if you need a specific lump sum, prefer predictable fixed payments, and want to lock in today's interest rate. Use our calculator to compare both options with your specific numbers.
Can I switch from a HELOC to a home equity loan?
Yes, many lenders offer refinancing options to convert your HELOC into a fixed-rate home equity loan. This can be beneficial if you want to lock in a fixed rate or avoid payment shock when your HELOC's draw period ends. However, this may involve closing costs and fees.
How do HELOC loan payments work during the draw period?
During the HELOC draw period (typically 10 years), you usually make interest-only payments on the amount you've borrowed. Your payment can fluctuate based on your balance and interest rate changes. After the draw period, you enter the repayment period where you pay both principal and interest, which often results in significantly higher payments.
What are the typical terms for HELOC loans and home equity loans?
HELOCs typically have a 10-year draw period followed by a 10-20 year repayment period, for a total term of 20-30 years. Home equity loans are usually 5-15 years with fixed monthly payments from the start. Both use your home as collateral.
Ready to Compare Your Options?
Use our calculator above to see which option saves you the most money!
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