Common Questions About Home Equity
What is home equity?
Home equity is how much your home is worth minus what you still owe. Example: Your home is worth $300,000. You owe $200,000 on your mortgage. Your equity is $100,000. This is the money that belongs to you.
How do I calculate my home equity?
It's easy. Step 1: Know your home's current value. Step 2: Know your outstanding mortgage balance. Step 3: Subtract the balance from the value. That's your equity. Use our calculator to get your answer in seconds.
What is the loan-to-value ratio (LTV)?
LTV shows how much you borrow compared to your home's value. As a percentage. Example: Borrow $100,000 on a $500,000 home = 20% LTV. A lower number means less risk. Banks like lower numbers and give better rates.
What is a HELOC?
A HELOC is a Home Equity Line of Credit. It's like a credit card for your home equity. Borrow money when you need it. Pay interest only on what you use. Your home is collateral. Interest rates can change.
What's the difference between a home equity loan and a HELOC?
Home equity loan: You get one lump sum. Fixed monthly payments. Predictable. HELOC: You draw money as needed. Variable payments. Flexible. Both use your home as collateral. Both have risks.
How much can I borrow?
Most banks let you borrow 80-90% of your equity. Example: If you have $100,000 equity, you might borrow $80,000-$90,000. But banks set their own rules. Rates and limits depend on your credit score.
What affects my interest rate?
Your rate depends on: Your credit score, The loan-to-value ratio, Market conditions, The bank's policies, How much you borrow, Whether the rate is fixed or variable. Better credit = lower rate. Shop around. Different banks offer different rates.
What if my home value drops?
If your home is worth less, your equity is less. You might not qualify for as much. You might have a negative equity (owe more than it's worth). Talk to your bank about your options. This is why home equity carries risk.
Can I use home equity to pay off credit cards?
Yes. This is called debt consolidation. Home equity loans usually have lower rates than credit cards. But remember: Your home is now collateral. If you can't pay, you could lose your home. Be careful. Make a plan to not run up credit cards again.
Are interest payments tax-deductible?
Maybe. If you use the money for home improvements, interest might be deductible. If you use it for other things, probably not. Tax laws change. Talk to a tax professional or CPA. We're not tax advisors. Keep good records of how you use the money.
What happens if I don't pay?
Your home is collateral. If you don't pay, the bank can foreclose. You lose your home. Foreclosure ruins your credit for years. You might owe money even after losing the home. Don't borrow more than you can afford.
How long does the application take?
Usually 5-10 business days. The bank needs to verify: Your income, Your employment, Your credit history, Your home's value. Faster applications sometimes take 3-5 days. Complicated cases might take 2-3 weeks. Ask the bank for a timeline.
What documents do I need?
Typically: Recent pay stubs, Tax returns (last 2 years), Bank statements, Proof of insurance, Property tax information, Current mortgage info, ID verification. Different banks ask for different things. Call ahead and ask what you'll need.
How many currencies does this calculator support?
We support 14 currencies: USD, EUR, GBP, JPY, AUD, CAD, CHF, INR, MXN, BRL, SGD, HKD, NZD, ZAR. Pick your currency and all results show in that currency. Makes it easy if you live internationally.
Is the calculator accurate?
Our calculator uses standard math and lending formulas. It's accurate for estimates. But real loans are more complex. Actual amounts, rates, and payments will be different. Always verify with your bank before applying. Use this for planning, not exact numbers.
Do you store my information?
No. We don't save anything you enter. We don't track you. We don't store your data. Your privacy is protected. Calculate as many times as you want. No spam. No ads targeted at you.
Can I use the calculator on my phone?
Yes. Our calculator works on phones, tablets, and computers. Use it anywhere. It's fast and responsive. No app needed. Just visit our website and calculate.
Who should I talk to before applying?
Talk to professionals: Your bank or lender, A financial advisor, A tax professional, Maybe an attorney. Don't apply based only on our calculator. Get real quotes. Compare lenders. Understand all costs.
Still have questions? Contact us or review our disclaimer page. Visit our About page to learn more.