Quick answer: A 2,000,000 home with 900,000 owed and an 80% limit leaves 700,000 to borrow; 300,000 of it at 6% over 10 years costs 3,330.62 a month.
How it's calculated
Lenders cap the combined loan-to-value (CLTV): everything secured on the home ÷ its value. Available to borrow = home value × max CLTV − mortgage balance. Many lenders use 80% to 85%.
A home equity loan is a lump sum repaid in fixed monthly payments: M = P·r ÷ (1 − (1 + r)^−n). For a credit line you draw as needed, use the HELOC calculator.
In the Gulf the same idea appears as equity release or cash-out home finance, often as a Murabaha or Ijara with a profit rate; the payment maths is the same. Check the UAE Central Bank and your bank's rules on loan-to-value.
Worked examples
- 2,000,000 value, 900,000 owed, 80%: available = 1,600,000 − 900,000 = 700,000
- 300,000 at 6% over 10 years: M = 3,330.62, interest 99,673.81
Frequently asked questions
Is a home equity loan the same as refinancing?
No. A home equity loan is a second loan on top of your mortgage. Refinancing replaces the mortgage; compare with the refinance calculator.
What can I use it for?
Lenders usually allow any purpose, such as renovation or paying off costlier debt. The rate is usually lower than unsecured finance because the home is security.
How is the home valued?
The lender orders a valuation, which may be below the price you expect. Use a cautious value here.
What is home equity?
Your home's value minus what you still owe on it. A 2,000,000 home with 900,000 owed has 1,100,000 of equity.
Why can't I borrow all of my equity?
Lenders keep a safety margin by capping the combined loan-to-value, often at 80% to 85%, in case the value falls.
What is the main risk?
The loan is secured on your home, so missing payments can put the home at risk. Borrow only what you can comfortably repay.