What would your HELOC payments look like, draw phase and after?

The draw-phase interest figure assumes a balance that never moves

This page's $40,000 total draw-phase interest comes from treating the $50,000 draw as constant for the full 10 years: $333.33 a month × 120 months. A real HELOC is revolving credit, though — pay some of it down mid-draw and interest immediately shrinks with the smaller balance; draw more later (up to the available $70,000) and it grows again. This figure is a ceiling for a balance held flat the whole time, not a forecast of what a fluctuating balance would actually cost.

The payment jump, in one number

Interest-only on $50,000 at 8% is $333.33 a month. The moment repayment begins, amortizing that same $50,000 over 20 years at 8% is $418.22 — a jump of $84.89 a month, or about 25% higher, for carrying the exact same balance. Nothing about the debt changed; only the requirement to also repay principal did. Running this page's numbers against your own expected balance at the transition, well before the draw period actually ends, is what keeps that jump from landing as a surprise.

The same available-equity ceiling as a lump-sum loan

The $70,000 available credit line here comes from the identical CLTV-ceiling formula as a fixed lump sum — home value times the maximum ratio, minus what's already owed. Where a HELOC and a Home Equity Loan genuinely differ is what happens after that ceiling is set: a lump sum locks in a fixed payment from day one, while this page's revolving structure means the balance itself, not just the rate, can still change before repayment ever starts. The Mortgage Calculator prices the original loan this equity sits behind, and the Amortization Schedule Calculator breaks the repayment-phase payment down month by month rather than as a single summary figure.

How does a HELOC work — draw period vs. repayment period?

A HELOC is a revolving credit line secured by your home equity. During the draw period — commonly 10 years — you can borrow, repay, and re-borrow up to your limit, typically making interest-only payments on whatever balance you've drawn, which is why the "interest-only payment" above is calculated on your draw amount rather than the full available credit line. Once the draw period ends, the line converts to the repayment period — commonly 10 to 20 years — during which you make fully amortizing payments covering both principal and interest on the outstanding balance, and can no longer draw new funds.

HELOC vs. home equity loan — which should I choose?

A HELOC suits ongoing or uncertain expenses — like a renovation with a variable budget, or a financial safety net you may never fully use — since you only pay interest on what you actually draw, not the full approved line. A home equity loan suits a known, one-time expense, since it gives a fixed lump sum at a fixed rate with predictable payments from day one. See the Home Equity Loan Calculator, a companion tool, to compare that fixed lump-sum structure directly.

Is HELOC interest rate fixed or variable?

Typically variable, tied to a benchmark like the prime rate, meaning your real payment can rise or fall over the life of the line as that benchmark moves. This calculator assumes a fixed rate for simplicity so the draw-phase and repayment-phase structure is easy to see; actual payments on a real variable-rate HELOC will fluctuate with the benchmark, so treat the numbers here as a snapshot at today's rate rather than a locked-in guarantee for the full term.

What happens when the draw period ends?

You can no longer draw new funds, and your payment typically jumps from interest-only to a fully amortizing payment covering both principal and interest on whatever balance remains — often a significant payment increase, as shown by the difference between the two payment figures above. It's worth running the numbers on your expected balance at that transition well before it happens, so the jump doesn't come as a surprise to your budget.

Worked example: a $400,000 home with a $250,000 existing mortgage balance and an 80% max CLTV gives an available credit line of $70,000. Drawing $50,000 of that at 8%, the interest-only payment during the 10-year draw period is $333.33/month, for total interest of $40,000 over the full draw phase. Once repayment begins, amortizing that same $50,000 over a 20-year repayment period at 8% gives a payment of about $418.22/month — noticeably higher than the interest-only figure, since it now includes principal.