Estimate the monthly payment, total interest, and payoff on a second mortgage or home equity loan. Compare the cost of borrowing against your home equity.
Monthly payment and total interest on a second mortgage or home equity loan.
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Combined loan-to-value
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Your breakdown
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Borrowing against equity you already hold
A second mortgage lets you tap the equity in your home without touching your first mortgage, which matters when your existing rate is low and you do not want to refinance the whole balance. The lender records a second lien, junior to your primary loan, and advances either a lump sum (a home equity loan) or a revolving line (a HELOC). Because the second-lien holder is repaid only after the first in a foreclosure, they price in that extra risk, so the rate runs higher than a first mortgage but still well below credit cards or personal loans. This calculator handles the fixed-rate, lump-sum version, where the payment is a level amount over the term.
A $50,000 home equity loan over 15 years
Borrow $50,000 at 8.5 percent over 15 years and the monthly payment is about $492, with roughly $38,600 of interest across the life of the loan. On a $400,000 home with a $250,000 first mortgage, adding this $50,000 second brings the combined loan-to-value to 75 percent, comfortably inside the 80 to 90 percent ceiling most lenders set. Watch the total interest figure: stretching a second mortgage over a long term lowers the payment but can cost more in interest than the project or purchase you are funding.
Second mortgage or cash-out refinance?
If your first mortgage rate is higher than today's rates, a cash-out refinance that rolls everything into one new loan may be cheaper. If your first mortgage rate is low, a second mortgage keeps that cheap rate intact and only charges the higher rate on the smaller new balance. Run both before deciding.
Frequently asked questions
What is a second mortgage?
A second mortgage is a loan secured by your home in addition to your primary mortgage. The most common types are a fixed-rate home equity loan, which advances a lump sum, and a HELOC, which works like a revolving line of credit. Because it sits behind the first mortgage in repayment priority, the rate is usually higher than a first mortgage but lower than unsecured debt.
How much can I borrow on a second mortgage?
Most lenders allow your combined loan-to-value, the first mortgage plus the second, to reach roughly 80 to 90 percent of the home value. Subtract your existing mortgage balance from that limit to estimate the available equity you can borrow against.
What is the difference between a home equity loan and a HELOC?
A home equity loan (second mortgage) disburses a lump sum at closing with a fixed interest rate and fixed monthly payment, making it predictable and suited to one-time large expenses. A HELOC (Home Equity Line of Credit) is a revolving credit line with a variable rate, meaning your payment changes as rates change. You draw from a HELOC as needed during the draw period, then repay during the repayment period. Use a second mortgage when you know exactly how much you need; use a HELOC when your needs are ongoing or uncertain.
Is second mortgage interest tax-deductible?
Only if the proceeds are used to buy, build, or substantially improve your home. The Tax Cuts and Jobs Act of 2017 eliminated the deduction for home equity loan interest used for personal expenses (credit card payoffs, vacations, cars). If you borrow against your home to renovate your kitchen or add a bathroom, the interest remains deductible up to the $750,000 combined mortgage debt limit. Debt used for other purposes does not qualify. Keep clear documentation of how you used the proceeds if you plan to deduct the interest.