How An Equity Loan Calculator Helps

Your home is potentially a little goldmine. Depending on circumstances, you could have a substantial amount of equity tied up in your home that if released, could secure you a substantial loan to use on whatsoever you please. The aim of this article is to explain exactly what equity is, how to calculate it by means of using an equity loan calculator, and how to release its power.

The term equity is the name we give to the sum of money tied up in your real estate if you were to take today current market sales valuation, and subtract the amount of money outstanding on any mortgages, or indeed any other loans secured against the property. In other words it is the net value of your home once all loans secured against it have been redeemed. The fast and easy way of discovering how much equity lies within your property, is to use an online equity loan calculator.

There are two types of equity finance that are obtainable, one is a HELOC, and the other is a HEL. The initials HEL stand for Home Equity Loan, and HELOC stands for Home Equity Line of Credit. Whichever type of loan you are considering, an equity loan calculator will work out the total equity available.

With a Home Equity Loan (HEL), you will be allowed to borrow up to 100% of the equity (as per the amount calculated by an equity loan calculator). The total sum of the loan is paid to you in one lump sum, and the repayments of the loan are made by regular fixed amounts for the duration, or term of the loan.

HELs are normally available up to 100% of the total equity, (as per an equity loan calculator), but it is possible to get a loan for as much as 125% of the amount of equity. The maximum repayment period is up to 30 years and the cost may be allowable as a tax deductable, but to be certain of this you need to check it out with a tax advisor.

A Home Equity Line of Credit (HELOC) on the other hand, is a credit arrangement whereby you can draw out sums of money as and when you need them. As with the HEL, the total amount available is normally 100% of the equity as calculated by an equity loan calculator) or, again, possibly up to 125%. With a HELOC you can have either a 10 or 20 year period (maximum), during which time you can continue to draw on the funds, after which there is a fixed term during which the amount borrowed must be repaid plus any interest due. Once again, this may be tax deductable so please consult a tax expert.

As regards the rate of interest levied against these loans, an HEL can be either a fixed or a variable rate, whereas a HELOC is normally the prime rate, plus whatever amount your lender wants to add, which varies from one lender to the next. But whichever route you decide that you want to explore, the starting point is an online equity calculator (simply type online credit calculator into your browser search window) that will indicate how much equity there is in your home.

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Equity Loan Calculator

home equity loan calculators

How An Equity Loan Calculator Helps

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