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Home Equity Line of Credit Payment Formula:
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A Home Equity Line of Credit (HELOC) is a revolving line of credit that allows homeowners to borrow against the equity in their home. RBC's HELOC offers flexible access to funds with variable interest rates.
The calculator uses the standard amortization formula:
Where:
Explanation: This formula calculates the fixed monthly payment required to fully amortize a loan over its term, including both principal and interest components.
Details: The PMT formula accounts for the time value of money, ensuring that each payment covers the interest for that period while gradually reducing the principal balance over the loan term.
Tips: Enter the loan amount in dollars, annual interest rate as a percentage (e.g., 5.25 for 5.25%), and loan term in years. The calculator will compute your monthly payment, total repayment amount, and total interest paid.
Q1: What is the typical interest rate for RBC HELOC?
A: RBC HELOC rates are variable and typically range from prime + 0.5% to prime + 1.5%, depending on creditworthiness and loan-to-value ratio.
Q2: How does HELOC differ from a traditional mortgage?
A: HELOC is a revolving credit line with variable rates and flexible repayment, while mortgages have fixed payments and terms. HELOC allows you to borrow, repay, and re-borrow as needed.
Q3: What is the maximum loan-to-value ratio for RBC HELOC?
A: RBC typically allows up to 65% of your home's appraised value for a HELOC, combined with your mortgage not exceeding 80% of the home's value.
Q4: Are there any fees associated with RBC HELOC?
A: There may be appraisal fees, legal fees, and annual fees. RBC often waives some fees for new HELOC applications during promotional periods.
Q5: Can I make extra payments on my HELOC?
A: Yes, one advantage of HELOC is the flexibility to make extra payments without penalty and access those funds again if needed.