Does a HELOC payoff strategy work for me?

Enter your numbers and compare three paths side by side. The answer is often "not really", and this tool will say so.

Educational illustration only, not advice. We do not make, offer, arrange, quote or negotiate loans, and we do not recommend lenders. Results are a simplified model and typical real results differ. The strategy needs a steady monthly surplus, and a HELOC rate is variable and can rise. A lender can freeze or reduce a line. Nothing you type here leaves your browser. Talk to a licensed mortgage, financial or tax professional before changing your mortgage.

Your numbers

Stress test: HELOC rate rises 2 points after year 1

What if the lender freezes the line and cuts the limit 50% in month 37?

Results

How this model works

A, Baseline: you pay the regular mortgage payment, and any existing HELOC balance is interest only.

B, Extra principal: same cash flow, but your monthly surplus (income minus expenses, the mortgage payment and any HELOC interest) goes to the highest-rate debt. Any lump sum you enter is paid to the mortgage in month 1.

C, HELOC strategy: your income is deposited into the HELOC and expenses and the mortgage payment are paid from it, with interest charged on the average daily balance, approximated by month. In month 1 and every 12 months after, the model draws the HELOC up to 90% of your limit and pays that lump to the mortgage. Any lump sum you enter is also paid to the mortgage in month 1. Cash flow is identical to B.

Not modeled: taxes, closing costs, fees, credit score effects, rate caps, changing income or spending, and the HELOC draw period ending. Expenses mean everything except the mortgage payment. The 50-year cap means "not paid off".

Want more education like this?

Educational emails only. Unsubscribe any time. See Privacy and Disclosures.