How does a HELOC draw period work?

During the draw period (typically 5-10 years), you can borrow up to the credit limit and typically make interest-only payments. After the draw period, the repayment period begins (10-20 years) with full principal and interest.

What is the payment shock when the HELOC repayment period begins?

Significant — on a $100,000 HELOC balance at 8%, draw period payment: $667/month (IO). Repayment period (15 years): $956/month — a 43% increase. Higher balances create larger shocks.

Are HELOC rates fixed or variable?

HELOCs are almost always variable rate, tied to the prime rate. A fixed-rate HELOC option is offered by some lenders but is less common. Rate caps vary by lender.

HELOC Draw Period Payment Calculator

Calculate interest-only payments during a HELOC draw period and the full payment after draw period ends. Includes analysis of variable rate impact.

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Frequently Asked Questions

How does a HELOC draw period work?

What is the payment shock when the HELOC repayment period begins?

Are HELOC rates fixed or variable?