1. What is Home Equity Line of Credit Interest?

Home Equity Line of Credit (HELOC) interest is the monthly cost of borrowing against your home's equity. It's calculated based on the outstanding balance and the monthly interest rate.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( I \) — Monthly interest (currency/month)
• \( B \) — Outstanding balance (currency)
• \( r \) — Monthly interest rate (decimal)

Explanation: The formula calculates the interest portion of your monthly HELOC payment based on the current balance and interest rate.

3. Importance of Interest Calculation

Details: Understanding your monthly HELOC interest helps with budgeting, financial planning, and assessing the true cost of borrowing against your home equity.

4. Using the Calculator

Tips: Enter the current balance in your currency and the monthly interest rate as a decimal (e.g., 0.005 for 0.5%). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert APR to monthly rate?
A: Divide the annual percentage rate (APR) by 12. For example, 6% APR = 0.06 ÷ 12 = 0.005 monthly rate.

Q2: Does this include principal payments?
A: No, this calculates only the interest portion. HELOC payments typically include both principal and interest.

Q3: Why is my HELOC interest variable?
A: HELOC rates are usually variable and tied to prime rate plus a margin, so your interest may change monthly.

Q4: When is HELOC interest tax-deductible?
A: Interest may be deductible if funds are used for home improvements. Consult a tax professional for specific advice.

Q5: What's the difference between HELOC and home equity loan?
A: HELOC is a revolving line of credit with variable rates, while home equity loans provide lump sums with fixed rates.