HELOC vs Personal Loan calculator
Borrowing a lump sum usually comes down to two choices, a HELOC secured by your home or an unsecured personal loan. This calculator lines up the payment and the total interest cost of each, using the same amount borrowed, so the real tradeoff is visible in dollars, not just rate percentages.
less total interest than the personal loan
- •Over its full 10 year life, borrowing $30,000 on the HELOC at 9.5% costs $22,053 in total interest.
- •Borrowing the same $30,000 on a personal loan over 10 years at 13.5% costs $24,819 in total interest.
- •That is a difference of $2,765, in favor of the HELOC.
| Metric | HELOC | Personal loan |
|---|---|---|
| Monthly payment | $238 then $630 | $457 |
| Payoff horizon | 10 years | 10 years |
| Total interest | $22,053 | $24,819 |
| Total cost, borrowed plus interest | $52,053 | $54,819 |
A HELOC is secured by your home, missing payments puts your home at risk in a way a personal loan does not. This estimate assumes only the interest only minimum gets paid during the interest only years -- paying extra toward the balance any time during that stretch, which most HELOCs allow, would lower the real total interest paid. Most HELOC lenders do not charge a penalty for paying off the balance early, but terms vary by lender, so it is worth confirming yours rather than assuming. Interest on a HELOC may be tax deductible when the money is used to buy, build, or substantially improve the home that secures it, and generally is not deductible otherwise. Rules here are specific and change, confirm your own situation with a tax advisor before assuming a deduction.
A free account keeps your numbers ready across every calculator, no re entering them each time.
How this calculator works
- Step 1Enter the amount you need
The same dollar amount is compared across both options.
- Step 2Enter both loan terms
HELOC rate, interest only and repayment periods, plus the personal loan rate and term.
- Step 3See the winner in dollars
Total interest for each option, and the exact difference between them.
Frequently asked questions
Why would I choose a personal loan over a cheaper HELOC rate?
A personal loan is unsecured, so missing payments does not put your home at risk the way it can with a HELOC, which is a second lien against your house. A personal loan also has a fixed rate and a fixed end date from day one, while a HELOC usually has a variable rate that can rise over its life.
Is HELOC interest tax deductible?
It can be, but only in specific cases, generally when the funds are used to buy, build, or substantially improve the home that secures the line, and only up to certain debt limits. This calculator does not model tax effects, confirm your own situation with a tax advisor before counting on a deduction.
Which option has a lower monthly payment?
During a HELOC's interest only period the payment is usually lower, since it is interest only on the drawn balance. A personal loan payment starts higher because it is amortizing principal from the first payment. That gap narrows or reverses once the HELOC hits its repayment period, which is exactly why this calculator shows both HELOC phases side by side.
Do I need home equity to qualify for a HELOC at all?
Yes, a HELOC requires enough equity in your home to support the loan, typically your mortgage balance plus the HELOC staying under 80% to 85% of your home value. A personal loan has no such requirement since it is not secured by property at all.
What happens if I cannot make HELOC payments?
Since a HELOC is secured by your home, a lender can eventually pursue foreclosure on a seriously delinquent HELOC, the same risk that applies to your first mortgage. A personal loan default damages your credit and can lead to collections, but it does not put your home directly at risk.
More home equity calculators
Your available credit line, plus the interest only payment now versus the real payment once repayment starts.
Two ways to turn home equity into cash, compared side by side on payment and total interest.
See what a home secured HELOC actually saves you in interest over paying off a card balance.
Every number on this page is a planning estimate, for informational and educational purposes only, not professional advice.
Before you act on any major decisions, consult a qualified accountant, tax advisor, or financial advisor who knows your full picture.