HELOC Payment Calculator

How this is calculated

The interest-only payment is the balance multiplied by the annual rate divided by twelve: balance × (annual rate ÷ 12). That is simple monthly interest, the way a line of credit is normally charged. The principal-plus-interest row uses the same simple monthly rate, i = annual rate ÷ 12, and a standard payment formula P = L × i ÷ (1 − (1 + i)⁻ⁿ), where L is the balance and n is the term in months.

That is different from a fixed-rate mortgage. Canadian fixed-rate mortgages compound semi-annually, so the effective monthly rate is (1 + annual rate ÷ 2)^1/6 − 1. A line of credit is typically a variable-rate product tied to prime, and the lender charges interest each month on the outstanding balance at the annual rate divided by twelve. That is why this tool does not apply semi-annual compounding to the HELOC.

Three things to keep in mind:

• An interest-only payment never reduces the balance, so the debt stays the same until you pay principal or the lender converts the line to a term loan.
• Rates on a line of credit move with prime, so the payment changes whenever the lender adjusts the rate.
• A lender may require a minimum payment that is a percentage of the balance, which can differ from the interest-only amount shown here.

All figures are estimates for planning only, not a quote, pre-approval, or approval. Confirm your actual rate, minimum payment, and repayment terms with your lender.