Home Equity Loan Debt Consolidation Calculator
A home equity loan clears your high interest debt without touching your first mortgage, so you keep the low rate you already have. This shows your new payment, your savings, the lifetime cost, and whether you even have the equity for it.
Your home and first mortgage
The debts you want gone
The home equity loan
Your monthly payment drops by
A home equity loan is a second loan secured by your home. It keeps your low first mortgage rate, which is its whole advantage over a cash-out refinance, but it still turns unsecured debt into debt your house is backing. And like any consolidation, it only sticks if the cards stay paid off. If they creep back up, you now owe the home equity loan and the cards. Use the freed-up payment to build a cushion, not to spend.
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When a home equity loan beats a cash-out refinance
The whole decision usually comes down to one thing: the rate on your current first mortgage. If you locked a low rate a few years ago, a cash-out refinance makes you give that rate up on your entire balance just to get at your equity. That can cost more than the debt you are trying to clear.
A home equity loan sidesteps that. Your first mortgage stays exactly where it is. You add a second, smaller, fixed-rate loan for just the debt you want gone. The rate on it is higher than a first mortgage, but you are only paying that higher rate on the small balance, not on your whole loan. When your first mortgage rate is low, that math usually wins. Run both this and the cash-out refinance and compare the lifetime numbers.
The equity you need
Lenders cap your combined borrowing against the home, usually somewhere around 80% to 90% of its value. That combined figure is your first mortgage plus the new home equity loan, divided by the value. The calculator checks it for you and tells you if the loan you want fits under the ceiling you set. If it does not, you either need more value, a lower first balance, or a smaller amount to consolidate.
The part that decides whether this works
Consolidation lowers the interest rate on your debt. It does not touch the reason the debt exists. The people this goes badly for are the ones who clear the cards, feel the relief, and slowly rebuild the balances, and now they are carrying the home equity loan on top. The people it goes well for treat the freed-up cash as a chance to get ahead. Be honest with yourself about which one you are before you put your house behind the debt.
Common questions
Is a home equity loan a good way to consolidate debt?
It can be, especially when your first mortgage rate is low and you want to keep it. You trade a high unsecured rate for a lower fixed rate on a second lien. The tradeoffs are that the debt is now secured by your home and the discipline to not rebuild the balances still has to be there.
Home equity loan or cash-out refinance for debt?
If your current mortgage rate is low, a home equity loan usually wins because you keep that rate on your big balance. If your current rate is high anyway, a cash-out refinance can do both jobs at once. Run both calculators and compare the monthly payment and the lifetime interest.
How much equity do I need for a home equity loan?
Enough that your first mortgage plus the new loan stays under the lender's combined loan to value cap, often around 80% to 90% of the home value. The equity check above shows whether your numbers fit.