HELOC Payment Calculator
Calculate your monthly payments for both the interest-only draw period and the full repayment phase.
Understanding Your HELOC Payments
A Home Equity Line of Credit (HELOC) is a unique financial tool because it functions differently than a standard mortgage or personal loan. Unlike a lump-sum loan, a HELOC has two distinct phases that significantly impact your monthly cash flow.
1. The Draw Period
During the draw period (typically the first 5 to 10 years), you can borrow against your credit line as needed. Most HELOCs only require interest-only payments during this time. While this keeps monthly costs low, it means you aren't reducing the principal balance of what you owe.
Example: If you have a $50,000 balance at an 8.5% interest rate, your interest-only payment would be approximately $354.17 per month.
2. The Repayment Period
Once the draw period ends, you enter the repayment phase (often 10 to 20 years). During this stage, you can no longer withdraw funds, and your monthly payment increases to include both principal and interest (P+I). This often results in a significant "payment shock."
Example: Using that same $50,000 balance at 8.5% over a 20-year repayment term, your payment jumps from $354.17 to approximately $433.91.
Variable vs. Fixed Rates
Most HELOCs feature variable interest rates tied to the Prime Rate. This means your payments can change monthly even if your balance stays the same. When using this calculator, it is wise to test higher interest rate scenarios to see if you can afford the payments if rates rise.
How to Use This Calculator
- Balance: Enter the amount you have borrowed or plan to borrow.
- Interest Rate: Enter the current APR offered by your lender.
- Draw Period: The number of years you can borrow and pay interest-only.
- Repayment Period: The number of years you have to pay back the full balance.