Home Equity Calculator

What the Home Equity Calculator does

It answers two questions that sound like one. How much equity do you have — simple subtraction, value less what is secured against it. And how much of that can you actually borrow — which depends entirely on which product you use, and is always a good deal less.

Rather than producing a single number, it lays out what a refinance, a readvanceable HELOC, a standalone HELOC, a second mortgage and a reverse mortgage would each allow, then costs the one that fits your reason for borrowing the way that product actually works.

• Your total equity, and the smaller share of it a lender will advance
• Every product’s ceiling side by side, with the one that fits your purpose marked
• A monthly cost calculated the way the recommended product is really repaid
• What a reverse mortgage’s "no monthly payment" compounds to over time
• Appreciation since purchase — and why it changes nothing about your ceiling

Why you cannot borrow your equity

The gap between total and accessible equity is not a technicality or a temporary condition. Lenders stop well short of your home’s full value on purpose: the untouched share is their margin against a falling market, the cost of selling a property nobody is repaying, and the time it takes to do it.

On a $900,000 home with $390,000 owing, there is $510,000 of equity. A refinance reaches 80% of value, which is $720,000, less the $390,000 already owed — so $330,000 is reachable. The remaining $180,000 exists, and is yours, and becomes spendable only when you sell. That last $180,000 is exactly 20% of the home’s value, which is the point: the ceiling is a share of the property, not a share of your equity.

It follows that paying down your mortgage raises accessible equity dollar for dollar, while the home appreciating raises it by only the ceiling percentage of the gain. The two are not equivalent, though they move total equity identically.

• Total equity: value less every dollar secured against the property
• Accessible equity: the product’s ceiling applied to value, less what is secured
• The untouched share is the lender’s protection, not an oversight
• Repaying principal frees room dollar for dollar; appreciation frees only a fraction
• Only a sale converts the locked portion into money

Five products, five different ceilings

These are not interchangeable, and the ceiling is only the first difference between them. How you receive the money, how you repay it and what it costs vary just as much.

A refinance replaces your mortgage and advances a lump sum up to 80% of value. It is usually the cheapest route for a large amount, and breaking an existing term to do it can trigger a prepayment charge worth calculating first. A readvanceable HELOC sits alongside your mortgage under the same 80% combined ceiling — but the revolving line inside it is separately capped at 65% of value, which is the detail most calculators miss. A standalone HELOC is its own charge under a single 65% ceiling and leaves your mortgage untouched.

A second mortgage or private lender reaches furthest, commonly to 90% of value, and prices accordingly — often into double digits, with lender and broker fees deducted from the advance. It is a fallback. A reverse mortgage works on an entirely different basis: the share advanced depends on the age of the youngest owner, from roughly 20% at 55 to about 55% by the mid-eighties, and no monthly payment is required at all.

• Refinance — up to 80% of value, one lump sum, mortgage rates, possible penalty
• Readvanceable HELOC — 80% combined, but the revolving line is capped at 65%
• Standalone HELOC — 65% of value, your mortgage left alone
• Second mortgage or private — up to 90%, at a materially higher cost
• Reverse mortgage — an age-based share, from 55 upward, with no monthly payment

A payment is not a carrying cost

It is easy — and common — to price every one of these products as balance times rate divided by twelve. That figure is the interest-only cost of a line of credit, and it is simply the wrong number for a refinance, which is an amortizing mortgage. On $330,000 at 6.49% the interest-only arithmetic gives about $1,785 a month; the actual payment is closer to $2,208. Roughly a quarter of the real cost disappears.

The two are not comparable in the other direction either. The mortgage payment is larger because part of it repays principal — money that goes back into your equity rather than being spent. The line-of-credit payment is smaller because none of it does; pay the minimum and the balance sits exactly where it started for as long as you let it.

There is a compounding difference underneath as well. Canadian fixed mortgages are compounded semi-annually by statute; lines of credit compound monthly. Applying one convention to the other product is a small error on any single payment and a visible one over a full amortization.

• A refinance payment amortizes — part of it rebuilds your equity
• A HELOC minimum is interest only — the balance does not move
• Mortgages compound semi-annually; lines of credit compound monthly
• Comparing the two by payment size alone flatters the line of credit
• This page costs each product the way that product actually works

What "no monthly payment" costs

A reverse mortgage requires nothing from you each month. That is the entire appeal, and for a homeowner with equity and no cash flow it can be the right answer — the proceeds are not taxable income, and the debt is settled from the property rather than from you.

But nothing being repaid means the balance compounds. At around 6.5%, an advance roughly triples over twenty years, and every dollar of that growth comes out of the equity that would otherwise pass to whoever inherits. This page projects the balance forward rather than describing it, because a product whose cost is invisible month to month deserves to have that cost made visible somewhere.

One further detail is easy to miss: a reverse mortgage must repay everything already registered against the home before you see a dollar. A homeowner of 62 with a $390,000 mortgage on a $900,000 home is eligible, and would be advanced about $253,800 — all of which goes to the existing lender, leaving nothing. That is a very different situation from being too young, and this calculator distinguishes the two rather than showing the same silent zero for both.

• No monthly payment is required, and the proceeds are not taxable income
• The balance compounds instead, and it comes out of your remaining equity
• The advance must clear your existing mortgage before you receive anything
• Eligibility starts at 55, and the share advanced rises with age
• A zero here can mean "too young" or "the mortgage absorbs it" — the page says which

Using your results well

Plan against the reachable figure, not the total. The locked portion is real wealth and it is worth knowing about, but it will not pay for a renovation.

Treat the recommended product as the start of a conversation. The right choice also turns on your credit, how your income is documented, how long you intend to hold the property, and whether you need one lump sum or ongoing access — none of which a handful of inputs can see. Equity is only the first test: income and credit still have to support whatever you borrow, and a comfortable ceiling here does not guarantee an approval.

And get the value right. Every figure on this page is a percentage of the number you entered, so an appraisal coming in 5% low takes about 4% of your home’s value off what you can borrow. It is the assumption everything else rests on.

• Budget against accessible equity, never against total equity
• Expect income and credit to be tested separately from the equity ceiling
• Price the prepayment charge before assuming a refinance is cheapest
• A low appraisal moves every figure here proportionally
• Follow through to the calculator built for whichever product you choose