Why are Home Equity Loan Rates Higher? The First Lender has Priority. One of the main reasons you will find higher interest rates on home equity loans than first mortgages is because of the risk the lender ... You Already Have a Mortgage. ... You Have Continual Access to Funds. ... Home Equity Loan Rates are Tied to Prime. ...How do you calculate a home equity loan?
Another way to express equity in your home is through the loan-to-value (LTV) formula. This is calculated by dividing the remaining loan balance by the current market value.