HELOC Calculator
Calculate Home Equity Line of Credit payments during the draw period and repayment period.
Enter details and click Calculate
Home Equity Line of Credit Calculator — Flexible Borrowing Against Your Property
A HELOC (Home Equity Line of Credit) is a revolving credit facility secured against your home equity — similar to a credit card but backed by your property at much lower interest rates. Unlike a Loan Against Property (which gives a lump sum), a HELOC provides access to a maximum credit limit that you draw from as needed, paying interest only on the amount actually drawn. In India, this product is offered by select banks as a "Reverse Mortgage Line of Credit" for senior citizens or as an "Overdraft Against Property" facility.
Here is an example: your home is valued at ₹70,00,000 with ₹25,00,000 outstanding loan. Maximum HELOC limit = (₹70,00,000 × 65%) − ₹25,00,000 = ₹45,50,000 − ₹25,00,000 = ₹20,50,000. You draw ₹8,00,000 to renovate your home. During the draw period (say 5 years), you pay interest only on ₹8,00,000 at 10.5% = ₹7,000/month. When you repay ₹3,00,000 of principal, interest drops to ₹4,375/month. At the start of the repayment period, you pay both principal and interest on the remaining balance until cleared.
What is a HELOC?
A Home Equity Line of Credit (HELOC) is a revolving credit facility secured against the equity in your home — the difference between your home's market value and the outstanding mortgage balance. Like a credit card, you can borrow up to a credit limit, repay, and borrow again during the draw period.
- In India, the equivalent is a Loan Against Property (LAP) or Home Equity Loan — you use your home as collateral to borrow at lower rates than unsecured loans (8%–14% vs 12%–24% for personal loans).
- Key advantage: as a secured loan backed by property, HELOC/LAP rates are significantly lower than personal loans or credit cards — making it a cost-effective way to access large amounts of capital.
- Risks: defaulting on a HELOC can lead to foreclosure since the home is collateral. Use HELOCs for productive purposes (home improvement, business investment) rather than consumption.
- The draw period (during which you can borrow) is typically followed by a repayment period — plan your cash flows carefully to ensure you can service the debt during both phases.
How to Use This Calculator
- Enter your Home Current Value (recent market value, e.g., ₹70,00,000).
- Enter the Outstanding Mortgage Balance (e.g., ₹25,00,000).
- Enter the LTV Percentage offered by the lender (typically 60%–70%).
- Enter the Amount You Plan to Draw (e.g., ₹8,00,000).
- Enter the Interest Rate and Draw Period duration.
- Enter the Repayment Period for principal + interest repayment after the draw period.
- Click Calculate to see interest-only payments during draw period and full payments during repayment period.
HELOC Payment Calculation
- = (70,00,000 × 65%) − 25,00,000 = ₹20,50,000
- Draw Period (Interest-Only Phase):
- Monthly Interest = Outstanding Balance × Annual Rate ÷ 12 ÷ 100
- On ₹8,00,000 at 10.5%: = 8,00,000 × 10.5% ÷ 12 = ₹7,000/month
- Repayment Period:
- EMI = Remaining Balance × r × (1+r)ⁿ / [(1+r)ⁿ−1]
- Balance ₹8,00,000 at 10.5% for 10 years: EMI = ₹10,778/month
Key Terms
- Draw Period
- The phase during which you can borrow up to the HELOC limit. During this period, you typically pay interest only on the amount drawn. You can repay and re-borrow (revolving), giving maximum flexibility. Draw periods in India are typically 3–10 years.
- Repayment Period
- After the draw period ends, no further borrowing is allowed and you repay the outstanding balance through EMIs over the repayment period. The shift from interest-only to principal + interest EMIs can cause payment shock if not planned for.
- Variable Interest Rate
- Most HELOCs (and Indian overdraft against property products) carry variable rates linked to the bank's base rate or EBLR. When RBI raises the repo rate, your HELOC interest rate rises, increasing your monthly interest payments on the drawn amount. Plan for rate increases in your cash flow projections.
- Indian Equivalent — Overdraft Against Property
- Indian banks offer "Overdraft Against Property" which functions like a HELOC — a sanctioned limit secured by property, from which you draw as needed and pay interest only on the amount used. Some banks also offer running accounts against FDs (at lower rates) that function similarly. Check HDFC Bank, SBI, and Axis Bank for their specific products.
Tips
- Use HELOC/overdraft against property for planned, productive expenses — the flexibility of revolving credit can lead to overborrowing if not disciplined.
- Plan for the payment shock when the draw period ends — the jump from interest-only payments to full EMI can be 2–3x the draw period payment. Budget for this in advance.
- Track your drawn balance carefully — since you only pay interest on what's drawn, keeping the drawn balance low minimises your interest cost while maintaining access to the limit.
- Variable rate risk: build a buffer of 2–3% in your interest payment estimates to account for potential rate increases during the HELOC term.
- Consider the opportunity cost — repaying the HELOC principal when cash is available reduces your interest cost significantly, as interest is calculated daily on the outstanding balance.
Frequently Asked Questions
A Loan Against Property (LAP) provides a fixed lump sum disbursed upfront, repaid through fixed EMIs over a predetermined tenure — similar to a regular term loan. A HELOC provides a credit limit from which you draw as needed — revolving credit with flexible drawdowns and repayments. HELOC is better for irregular or ongoing funding needs (business working capital, home renovation over time). LAP is better for known, one-time large requirements (buying another property, lump sum investment).
The US-style HELOC is not widely available in India under that name, but functionally equivalent products exist: (1) Overdraft Against Property — a sanctioned limit secured by property, with interest charged only on the amount utilised, offered by SBI, HDFC Bank, and others; (2) Reverse Mortgage Line of Credit — for senior citizens (60+) to access home equity as a credit line without EMI repayment during their lifetime; (3) Home Equity Withdrawal — some banks offer structured equity withdrawal against appreciated property values for existing home loan customers.
Payment shock occurs when the HELOC transitions from the interest-only draw period to the full principal + interest repayment period. For example: during the draw period with ₹8,00,000 outstanding at 10.5%, interest-only payment = ₹7,000/month. After the draw period, the same balance on a 10-year repayment schedule requires an EMI of ₹10,778/month — a 54% increase. Prepare by: (1) making principal repayments during the draw period to reduce the balance before repayment begins, (2) building savings to cover the higher payment, (3) planning to refinance into a standard term loan if the payment becomes unmanageable.
Yes — home renovation and home improvement are among the most common uses of HELOC/overdraft against property. Since the borrowed funds improve the property value itself, it is a productive use of secured credit. Using HELOC for a down payment on another property is also possible but riskier — you're leveraging one property to buy another, amplifying both potential gains and losses. Ensure the rental income or appreciation from the second property more than covers the HELOC interest cost.
Key risks: (1) Your home is collateral — default can lead to property loss under SARFAESI proceedings, (2) Variable interest rate risk — rising rates increase your interest burden on the drawn balance, (3) Revolving credit temptation — the availability of funds can lead to overborrowing for non-productive purposes, (4) Payment shock at end of draw period — significantly higher EMIs when principal repayment begins, (5) Property value decline — if market values fall, your available HELOC limit may be reduced by the lender. Always borrow conservatively and maintain a clear repayment plan.