UtilibyWritten by the Utiliby editorial team · Last updated October 15, 2026 · Rules and formulas reviewed October 2026
What this free online refinance vs HELOC calculator does
If you need a large sum of cash and own a home with equity, you have three common ways to borrow against it: a cash-out refinance, a home equity line of credit (HELOC) or a home equity loan. They look similar on the surface, since all three are secured by your home, but they work differently and can cost very different amounts. This free online refinance vs HELOC calculator puts them side by side so you can compare the monthly payments, the interest, the fees and the risk.
Enter your home value, your current mortgage and the cash you need, then enter the rates and fees you were quoted for each option. The calculator adds up the interest and fees on all your loans over the period you choose, shows the payment each month, and tests what happens if the variable HELOC rate rises. Everything runs in your browser, so your figures stay private.
How to use the refinance vs HELOC calculator
- Describe your home and your mortgage. Enter the value, the balance, the rate and the years left.
- Enter the cash you need and the number of years you expect to carry the borrowing.
- Fill in the three options. Use real quotes where you can. For the HELOC, enter the draw period, the repayment period, the fees and a yearly rate change if you want to test a rising rate.
- Read the comparison. The cheapest option is highlighted, and the table shows the first payment, the highest payment and the total cost.
- Check the other tabs. Payments over time shows the payment path, and HELOC rate risk shows how a rising rate changes the answer.
How each option works
| Option | What happens to your mortgage | Rate | Main risk |
|---|---|---|---|
| Cash-out refinance | Replaced by a larger new one | Fixed or adjustable, on the whole loan | Higher rate on money you already owe; larger costs |
| HELOC | Stays as it is | Usually variable | Rising payments; payment jump after the draw period |
| Home equity loan | Stays as it is | Usually fixed | Higher rate than a first mortgage; fees |
All three put your home at risk if you cannot repay. A second loan also ranks behind your first mortgage, which is why lenders charge a higher rate for it than for a first mortgage.
Worked example
A homeowner has a home worth 400,000, a mortgage of 220,000 at 3.5% with 24 years left, and needs 60,000. A cash-out refinance at 6.75% on a new 30-year loan of about 288,000 with 2.5% costs raises the interest on the whole balance. Keeping the cheap mortgage and adding a HELOC at 8.25% or a 15-year home equity loan at 8% costs more on the 60,000 but leaves the 3.5% mortgage alone. Over ten years, the HELOC or the home equity loan is far cheaper than the refinance in this case, because the refinance resets the rate on 220,000 from 3.5% to 6.75%. The tool shows the exact amounts and flags the combined loan-to-value.
Change the inputs and the answer can reverse. If your existing mortgage rate is 7%, a cash-out refinance at 6.5% becomes the clear winner.
The existing mortgage rate decides most cases
A cash-out refinance does two things at once: it gives you cash, and it changes the rate on everything you owe. When your old rate is low, the second effect is expensive. When your old rate is high, the second effect is a benefit. Comparing the three options as total interest and fees across all loans captures both effects, which a simple comparison of the new loan rates misses.
HELOC risks: variable rates and the payment jump
A HELOC's low initial payment can mislead. During the draw period you may pay interest only, so the balance does not fall. When the repayment period starts, the payment includes principal and can rise sharply. The rate also follows an index, so the payment can change even in the draw period. Lenders may reduce or freeze a line in some circumstances. Use the rate risk tab to see what a rising rate would do, and keep in mind that the rate change you enter is a stress test, not a forecast.
How to choose
- Need a lump sum and want certainty? A home equity loan has a fixed rate and payment.
- Need flexibility? A HELOC lets you borrow as needed, with the rate risk.
- Want a lower rate on the whole mortgage as well? A cash-out refinance can make sense when your current rate is higher than the new one.
- Need a small amount? A second loan usually avoids the cost of refinancing everything.
- Close to the loan-to-value limit? Check the combined ratio, because lenders limit it.
Common mistakes
- Comparing only the new rates. Ignore the effect on your existing mortgage and you will get the wrong answer.
- Ignoring the end of the draw period. Plan for the higher payment.
- Forgetting fees. Closing costs and annual fees change the result.
- Borrowing more than you need. Equity is not free money.
- Using the money for something that loses value without a repayment plan.
Related refinance tools and guides
This calculator is one of a set of free refinance tools on Utiliby. Depending on what you are deciding, these may help next.
- Cash-Out Refinance Calculator: check the cash-out limits in detail.
- Mortgage Refinance Calculator: a rate-and-term refinance.
- Rental Property Refinance Calculator: for a rental property.
For background reading:
Privacy, accuracy and limits
The calculator runs entirely in your browser. The figures you enter are not sent to a server and are not stored, and reloading the page returns the example. The default rates and fees are illustrations. Taxes, insurance and tax deductibility are not included, the HELOC is modelled as fully drawn at the start, and the result is an estimate, not a loan offer. Confirm every number with the lender before you decide.
Frequently asked questions
Is a HELOC or a cash-out refinance cheaper?
It depends mainly on your existing mortgage rate. If your current rate is well below today's rates, a HELOC or home equity loan often costs less because you keep the cheap mortgage and borrow only the extra cash. If your current rate is high, a cash-out refinance can win. Enter your own figures to see.
What is the difference between a HELOC and a home equity loan?
A home equity loan is a lump sum with a fixed rate and fixed payments. A HELOC is a credit line with a variable rate, usually interest-only during a draw period, followed by repayment of principal and interest.
What is the difference between a HELOC and a cash-out refinance?
A cash-out refinance replaces your mortgage with a larger one and gives you the difference in cash. A HELOC is a second loan that sits beside your existing mortgage, which stays as it is.
Why does my current mortgage rate matter so much?
A cash-out refinance resets the rate on your whole balance, not only on the new cash. If your old rate was much lower, you pay a higher rate on money you already owe. A second loan avoids that.
What happens to a HELOC payment when the draw period ends?
The payment usually jumps because you start repaying principal as well as interest. The Payments over time tab shows the step so you can plan for it.
Are HELOC rates fixed or variable?
They are normally variable, tied to an index such as the prime rate plus a margin, with caps. Some lenders let you fix part of the balance. The rate risk tab shows what rising rates do to the cost.
How much can I borrow against my home?
Lenders usually limit the combined loan-to-value, often to around 80% to 85% of the home's value, though it varies. The tool shows the combined loan-to-value for each option so you can see if you are near a typical limit.
What are the closing costs of each option?
A cash-out refinance often has the highest costs because they apply to the whole loan. A home equity loan has smaller costs. HELOCs may have low or no set-up costs but may charge an annual fee. Enter the fees you were quoted.
Can I deduct the interest?
In some countries, such as the United States, interest on home equity borrowing may be deductible only if the money is used to buy, build or substantially improve the home that secures the loan, and subject to limits. Ask a tax adviser. This tool ignores tax.
Is a cash-out refinance a good way to pay off debt?
It can lower the rate on high-interest debt, but it turns unsecured debt into debt secured by your home. If you cannot repay, you risk the home. Compare the total cost and your plan to avoid running up the debt again.
What if I only need a small amount?
A smaller loan often favours a HELOC or home equity loan, because the cost of refinancing the whole mortgage is large compared with the cash you receive.
What if I need the money for a short time?
A HELOC can suit short-term needs, because you pay interest only on what you use and can repay it flexibly. A cash-out refinance has a long payback for the costs.
How long should I compare for?
Use the time you expect to keep the borrowing. A short period favours low-fee options. A long period favours the lowest rate. Try several periods.
Does the calculator include taxes and insurance?
No. These are usually the same for each option. It compares the principal and interest on the loans involved, plus the fees.
How accurate are the default figures?
They are only examples. Replace the rates and fees with real quotes, because they vary by lender, credit and location.
Is my information private?
Yes. The calculator runs in your browser. Nothing you enter is sent to a server, saved or shared, and reloading the page resets it.
Is this refinance vs HELOC calculator free?
Yes. It is a free online calculator with no sign-up, trial or limit. You can print or download the results.
Sources and further reading
- Consumer Financial Protection Bureau, "What is a home equity line of credit (HELOC)?" and "What is a home equity loan?" (consumerfinance.gov/ask-cfpb).
- Consumer Financial Protection Bureau, "What You Should Know About Home Equity Lines of Credit" (consumerfinance.gov).
- Federal Trade Commission, "Home Equity Loans and Home Equity Lines of Credit" (consumer.ftc.gov).
- Internal Revenue Service, Publication 936, Home Mortgage Interest Deduction (irs.gov).
Sources were consulted in October 2026. Standards and rules can change, so always check the official page for your situation.