HELOC vs Personal Loan Calculator
Example: Amount to borrow: 25000 $ · HELOC APR (current rate): 8.5 % · HELOC repayment term: 120 months · HELOC closing costs: 1000 $ · Personal loan APR: 13.5 % · Personal loan term: 60 months
| Savings with cheaper option | $3,681 |
| HELOC monthly payment | $310 |
| Personal loan monthly payment | $575 |
| HELOC total cost (payments + closing) | $38,196 |
| Personal loan total cost | $34,515 |
| HELOC total interest | $12,196 |
| Personal loan total interest | $9,515 |
Worked example
Borrowing $25,000: the HELOC at 8.5% over 10 years costs $310/month and $12,200 in interest plus $1,000 closing costs — $38,200 total. The personal loan at 13.5% over 5 years costs $574/month and $9,440 in interest with no closing costs — $34,440 total. Despite the higher rate, the personal loan costs $3,760 less in this scenario because the shorter term prevents interest from accumulating. The HELOC wins for longer terms or lower rates; the personal loan wins for short payoff horizons.
Frequently asked questions
What is the biggest risk of a HELOC that this calculator cannot quantify?
Your home is collateral. If you default on a HELOC, the lender can foreclose — the same as a mortgage default. A personal loan default damages your credit and leads to collections, but you do not lose your house. That risk premium is real and varies by individual, which is why some financial advisors recommend personal loans for debt consolidation even when the HELOC rate is lower.
Are HELOC rates fixed or variable?
Most HELOCs have variable rates tied to the prime rate. This calculator uses a fixed rate for simplicity. In a rising-rate environment, the HELOC payment will increase; in a falling-rate environment, it will decrease. If rate certainty matters, a personal loan (usually fixed rate) or a home equity loan (fixed lump sum) may be preferable to a HELOC.
Is HELOC interest tax-deductible?
As of the Tax Cuts and Jobs Act, HELOC interest is only deductible if the funds are used to buy, build, or substantially improve the home securing the loan. If you use the HELOC for debt consolidation or other non-home expenses, the interest is no longer deductible. Personal loan interest is not deductible.
How do closing costs on a HELOC compare to a home equity loan?
HELOCs and home equity loans both typically carry closing costs of $0–$2,000 depending on the lender and the amount, including appraisal, title, and origination fees. Some lenders waive closing costs in exchange for a slightly higher rate, or require you to hold the line for a minimum period (often 3 years) or repay the waived costs.