Variable vs. Fixed Payments
Compare the flexibility of HELOC payments against the stability of Home Equity Loan payments.
HELOC vs Home Equity Loan Payment Calculator
Deciding between a HELOC and a Home Equity Loan often comes down to the monthly payment structure. Do you want lower, interest-only payments now with a variable rate (HELOC)? Or do you prefer higher, consistent principal and interest payments with a fixed rate (Home Equity Loan)? This calculator compares both side-by-side.
Side-by-Side Payment Comparison
| Feature | HELOC (Variable) | Home Equity Loan (Fixed) |
|---|---|---|
| Initial Monthly Payment |
$354
(Interest Only) |
$507
(Principal + Interest) |
| Payment Stability |
Variable Changes with Prime Rate |
Fixed Never changes |
| Future Payment Shock |
Yes Jumps to $492+ after 10 years |
No Stays at $507 until paid off |
| Total Interest Cost | $73,938 | $41,288 |
Comparison Summary
The HELOC offers a lower initial payment (saving you $153/mo now), but carries the risk of rate increases and a payment shock later. The Home Equity Loan costs more monthly upfront but guarantees stability.
Frequently Asked Questions
Why is the HELOC payment so much lower initially?
During the "draw period" (usually 10 years), most HELOCs require you to pay only the interest on the money you've borrowed. You aren't paying back the principal balance yet. A Home Equity Loan requires you to pay both principal and interest from day one.
Which is better for budgeting: HELOC or Loan?
A Home Equity Loan is generally better for strict budgeting because the payment never changes. You know exactly what you owe every month for the life of the loan. A HELOC requires a flexible budget that can absorb rate hikes and the eventual payment increase.
Can I convert my HELOC to a fixed loan later?
Many lenders offer a "fixed-rate option" on their HELOCs, allowing you to lock in a portion of your balance at a fixed rate. This effectively turns that portion into a Home Equity Loan payment structure. Check your specific loan agreement for this feature.
Compare Your Options
See the difference between variable and fixed payments.
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