Things You'll Need:
- Mortgage statement
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Step 1
Find the principal balance on your loan. This is the amount it would take to pay off the entire balance of your home equity line of credit (HELOC). Your principal balance should be reflected on your monthly mortgage statement. If it's not, call your lender and find out the balance of your principal. If you haven't used your equity line of credit account to borrow against your home equity, you will have no payment due and no interest accrued.
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Step 2
Determine where you are in the lifetime of the loan. Most home equity lines of credit have a life span of 5 to 10 years where a homeowner can borrow against the assessed equity of a property and the interest assessed during that payback duration. This is called a draw period. For example, if you have $30,000 in equity on your home, and you have only borrowed against $15,000 on your home equity line of credit, you still have the maximum span of 10 years to repay this amount from the date of draw, or the date that the loan was taken out. It's important to know if you are at year two or year five on your payback schedule.
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Step 3
Review the draw period. With a home equity line of credit, the draw period can be confusing. If you have $30,000 in equity currently in your home, and you have only borrowed $10,000, your day of your draw period begins the day you borrowed the $10,000. From that day you will have 5 to 10 years to pay back that $10,000 loan. However, if you borrow an additional $5,000 one year later, your date of draw for that amount begins the day that you borrowed the $5,000, and it will be added to what you have already paid out in the $10,000 loan. This can reset the repayment period for each time you borrow against your equity.
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Step 4
Calculate the interest on your home equity line of credit. Most interest rates on equity lines are variable and depend on the real estate market in the nation. For example, if your line of credit is at a rate of 5 percent, your HELOC account could have a variable rate several points higher than that or lower. Interest is added daily on variable rate loans, so in order to calculate your interest, you would take the amount owed (say $15,000, for example), multiply it by 5 percent and then divide the sum of those numbers by the amount of days in the year. An example of your calculation would look like this: 15,000 x 5% = $750/365 = $2.04 per day.
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Step 5
Calculate your payment based on the value of the life of the loan. If you are in the draw period (meaning you can still borrow against the equity), you are not yet making principal payments on the account. Whereas if you are out of the draw period and are repaying the loan, whatever is not deduced from the monthly interest is deducted from the principal balance of the loan.
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Step 6
Use an amortization calculator, such as the one on Bankrate.com (see Resources). This will allow you to plug in variables to your home equity line of credit account and provide you with several repayment scenarios to your loan amount, balance and principal, no matter what part of the loan life you are in.
