Authoritative data & methodology

Primary references: Consumer Financial Protection Bureau (CFPB), “What is a home equity line of credit (HELOC)?” and related HELOC guidance; Board of Governors of the Federal Reserve System, Consumer’s Guide to HELOCs. Tutti i calcoli si basano rigorosamente sulle formule e sui dati forniti da questa fonte.

The formula explained

Draw (interest-only): \\( \\, \mathrm{Payment}_{draw} = B_0 \\times \\frac{r}{12} + \\frac{\\text{AnnualFee}}{12} \\)
Repayment (amortization): \\( \\, P = B_{end\\,draw} \\cdot \\dfrac{r_m}{1-(1+r_m)^{-n}} \\), where \\( r_m = \\frac{\\text{APR}}{12} \\) and \\( n = 12\\times\\text{years} \\).
CLTV credit limit: \\(\\, \\text{Max Credit} = \\text{MaxCLTV}\\% \\times V - M \\).

Variable glossary

  • V: Home value; M: Existing mortgage balance.
  • MaxCLTV%: Lender combined loan-to-value limit.
  • Index + Margin: Variable-rate components. APR = Index + Margin.
  • Draw period: Interest-only phase length (years).
  • Repayment: Amortization period length (years).
  • Annual fee: Modeled pro-rata (monthly) during draw.

How it works: a step-by-step example

Inputs: V=$450,000; M=$250,000; MaxCLTV=80%; planned draw=$40,000; Index=8.50%; Margin=0.50%; assumed repayment APR=9.00%; Draw=10y; Repayment=20y; Annual fee=$75.

  1. Max credit = 0.80×450,000 − 250,000 = $110,000 → draw $40,000 is allowed.
  2. Initial APR = 8.5% + 0.5% = 9.0% → monthly rate r=0.09/12.
  3. Draw payment ≈ 40,000×0.09/12 + 75/12.
  4. Repayment payment uses amortization with balance at end of draw (assuming interest-only, balance stays ≈ $40,000).
  5. Totals sum interest across draw + repayment and add fees.

Competitor gaps we close

  • Realistic two-phase model (interest-only draw + amortized repayment) with clear switch-over and both payments shown.
  • Index + Margin inputs with a planning APR for repayment and an awareness note for lifetime caps.
  • CLTV limit computation to validate the draw amount at input time.
  • Accessible UX: labels, on-blur validation, tooltips, keyboard-friendly, visible focus.
  • Auditability: LaTeX formulas, printable schedule, CSV export.

FAQ

Does this assume only one draw?

Yes. This version models a single initial advance for clarity and auditability. Multiple staged draws can be approximated by re-running with updated balances.

Why separate repayment APR?

HELOCs are variable. Your repayment phase APR might differ from today’s Index+Margin; planning explicitly for it is prudent.

How do fees affect results?

Annual fees are spread monthly during draw; origination and other closing costs aren’t modeled here but can be added to the draw for a conservative plan.

Can the rate exceed the cap?

Lender contracts include lifetime and periodic caps. We show a cap awareness note; use a conservative repayment APR within that cap.

Is CLTV the only approval factor?

No. Income, credit, occupancy, and property type matter too. CLTV simply bounds the maximum allowable credit.

Tool developed by Ugo Candido. Finance content reviewed by the CalcDomain Editorial Board.
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