Refinance a Personal Loan Into a Home Equity Loan?

This calculator estimates the monthly payment and total interest on a fixed-rate loan using the amount, APR, and term you enter. To explore refinancing a personal loan with a home equity loan, enter the amount you would borrow, the offered APR, and repayment term; compare the estimate with the personal loan’s remaining costs and any fees separately.

Formula

The calculator uses the standard fixed-payment amortization formula. It converts the annual percentage rate (APR) to a monthly rate and the term in years to a number of monthly payments:

• Monthly payment: M = P × r / [1 − (1 + r)⁻ⁿ]
• Total interest: I = M × n − P

P is the amount borrowed in dollars, APR is the annual percentage rate entered as a percent, r = APR / 1200 is the monthly rate as a decimal, n is the term in years × 12, M is the monthly payment in dollars, and I is total interest in dollars. The payment displayed is rounded to cents; total interest uses that rounded payment.

Worked Example

Using the calculator’s defaults—$20,000, an 8% APR, and five years—the term is 5 × 12 = 60 months, and the monthly rate is 8 / 1200 = 0.0066667.

1. Monthly payment = 20,000 × 0.0066667 / [1 − (1.0066667)⁻⁶⁰].
2. The payment rounds to $405.53 per month.
3. Total of the rounded payments = $405.53 × 60 = $24,331.80.
4. Total interest = $24,331.80 − $20,000 = $4,331.80.

Assumptions

• The interest rate stays fixed for the full term.
• Payments are equal monthly payments, made at the end of each monthly period.
• Interest compounds monthly at APR / 12.
• The estimate excludes fees, taxes, insurance, and any costs not entered as part of the loan amount.

Can You Refinance a Personal Loan With a Home Equity Loan?

Often, a borrower can use proceeds from a home equity loan to pay off a personal loan, if a lender approves the home-secured borrowing and the loan terms permit the intended use. The new loan is secured by the home; a personal loan is commonly unsecured. That difference matters: the transaction does not merely replace one payment with another, but changes what is at risk if payments are missed.

A home equity loan generally provides a lump sum repaid in scheduled installments. The borrower could use some of that sum to pay the personal-loan payoff amount, which may differ from its original balance because of payments, accrued interest, or a payoff quote’s timing. Any remaining proceeds and closing costs should be accounted for in the comparison. The calculator models only principal, APR, and term; it does not determine eligibility, payoff figures, or whether a lender allows a particular use.

Compare the Full Cost, Not Just the Payment

A lower monthly payment can result from extending repayment over more months, even if the total interest or overall cost is higher. Compare both loans over the period you expect to carry them, and include costs associated with setting up the home equity loan. Request a written payoff amount for the personal loan and an itemized estimate of the new loan’s fees and other charges. Ask how any charges are paid or added to the balance.

For example, imagine a personal loan has $12,000 remaining and 30 scheduled payments left. A proposed home equity loan could spread that debt over a longer term. Its monthly payment might be lower because payments are spread out, but interest could accrue for longer, and upfront costs could offset any apparent savings. The exact result depends on the actual balance, rates, term, payment schedule, and fees; the example does not predict an offer.

• Compare the remaining personal-loan payments and interest with the new loan’s payments and interest.
• Include transaction costs, and account for whether costs are paid upfront or financed.
• Check whether either loan has a prepayment charge or other payoff condition in its documents.
• Use the same payoff horizon in both calculations when assessing costs over a limited period.

Risks and Details to Check

The key risk is collateral: the home secures the new debt. If the borrower cannot meet the home equity loan’s obligations, the consequences can include loss of the home through the applicable collection process. A personal loan that was not secured by the home does not put the property up as collateral in the same way. Consider the change in risk separately from the payment arithmetic.

Also check whether the quoted APR is fixed or variable, how the payment can change, and whether the quoted rate includes charges. This calculator assumes a fixed APR. It cannot model a variable rate, irregular payments, fees, or changes in the amount owed. A lender’s disclosure and loan documents provide the specific terms; do not treat an online estimate as an offer or approval.

Alternatives and Useful Comparisons

Before comparing a home equity loan, a borrower can also examine keeping the personal loan under its current schedule, making additional payments if permitted, or asking about a new unsecured personal loan. A home equity line of credit is another form of home-secured borrowing, but it works differently from a lump-sum loan: it generally allows borrowing from an available credit line under its own rate and repayment terms. The calculator here does not model a line of credit.

For any alternative, compare the amount needed to clear the current debt, payment timing, total cost, rate structure, fees, and collateral. A longer term can reduce the required monthly payment while increasing the time debt remains outstanding. No single payment figure captures all of those trade-offs.

Frequently Asked Questions

Can I use a home equity loan to pay off a personal loan?
Possibly. The lender’s approval, loan terms, and permitted use determine whether the proceeds can be used for this purpose. A payoff quote identifies the amount needed to close the personal loan.

Does refinancing this way make my personal loan secured?
The original personal loan does not automatically become secured. Instead, the new home equity loan is secured by the home, and its proceeds may be used to pay the personal loan.

Could my monthly payment go down while total interest rises?
Yes. A longer repayment term can lower the monthly payment while extending the period over which interest is charged. Compare the total payments and costs, not only the monthly amount.

Does this calculator include closing costs or payoff fees?
No. It uses only the loan amount, APR, and term. Obtain actual payoff and fee figures, then account for them separately or include financed costs in the amount borrowed if appropriate.

What information should I get before comparing offers?
Get the personal loan’s payoff amount and remaining schedule, plus the proposed home equity loan’s APR, fixed-or-variable status, term, payment schedule, itemized costs, and applicable payoff conditions.

This result is an estimate; the lender’s disclosure gives the exact figures.

Related

• Cost No Refinance Loan? Estimate the Payment Difference
• Can You Refinance a Personal Loan at a Bank?
• Car Loan Refinance Calculator and Payment Estimate

in p | Loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2