HELOC Draw vs Repay Calculator
Compare HELOC interest-only draw period vs principal+interest repayment costs.
What this calculator does
This calculator isolates the transition that defines a HELOC: the moment the draw period ends and interest-only payments become fully amortizing ones. It takes your credit line, the amount drawn, the rate, and both period lengths, then shows the draw payment, the repayment payment, and the total interest across the whole life of the line.
Setting those two payments side by side is the entire point. During the draw period a HELOC feels like the cheapest money available. The repayment figure is the number that determines whether it stays that way, and it is rarely the one emphasized at closing.
When to use it
Use it before you draw, not after. Deciding how much to take from the line is a different decision once you can see what that balance costs per month starting ten years out, and the amount most people would draw for a kitchen remodel looks different against a 20-year amortizing payment.
The second moment is roughly two to three years before your draw period ends, which is the last point at which you have real options. If the repayment payment does not fit your budget, that window is when you refinance, pay down principal aggressively, or open a new line — all of which require qualifying, and all of which get harder once the payment has already jumped.
Understanding the inputs
Amount drawn matters far more than the credit line here, because interest and the eventual amortization apply only to what you have actually taken. An unused line changes nothing in these figures.
The HELOC rate is variable in practice, so run today's rate and then a stressed rate two or three points higher — a rise hits both phases, and during repayment it feeds directly into the amortizing payment. Draw period is usually 10 years. Repayment period is the input that drives the payment jump: 20 years is standard, but 10 and 15-year repayment periods exist and produce dramatically higher payments.
How is this calculated?
Draw Period: Interest only = Balance × Rate / 12. Repayment: Monthly = P[r(1+r)^n]/[(1+r)^n-1].
A worked example
Take $60,000 drawn on a $100,000 line at 8.5 percent, with a 10-year draw period and a 20-year repayment period. The draw payment is $425 a month, all interest. Over ten years that is $51,000 paid with the balance still sitting at $60,000.
When repayment begins the payment rises to about $521 — a 23 percent jump, which sounds survivable. Now compress the repayment period to 10 years and the payment becomes roughly $744, up 75 percent. Alternatively, paying an extra $250 a month during the draw period would leave a balance near $15,000 instead of $60,000, and a repayment payment around $130.
Limitations and assumptions
The rate is held fixed here, which understates the risk on a product tied to prime. It also assumes a single draw taken at the outset and no further draws or paydowns during the draw period, whereas real lines see balances move constantly.
It does not model lender line freezes, fixed-rate lock options, annual fees, or lines that end in a balloon rather than a repayment period. Because your home secures the debt, read the actual agreement for the repayment terms and any rate cap, and speak to your lender or a HUD-approved housing counselor if the projected repayment payment does not fit.
Common Questions
- What exactly changes when the draw period ends?
- Two things at once. You lose the ability to draw further funds, and your payment switches from interest only to full amortization of the outstanding balance over the repayment period. On a balance carried at 8.5 percent, that transition typically raises the payment by 20 to 25 percent, and by far more if the repayment period is short.
- How much does the payment actually jump?
- It depends on the balance, rate, and repayment length. On $60,000 at 8.5 percent, an interest-only draw payment of $425 becomes about $521 over a 20-year repayment — a 23 percent rise. Compress the repayment period to 10 years and the payment goes to roughly $744, a 75 percent increase.
- Can I refinance a HELOC before repayment starts?
- Usually yes, and it is the most common escape route. Options include a new HELOC that resets the draw period, a fixed-rate home equity loan, or folding the balance into a cash-out refinance of the first mortgage. All require qualifying again on current income, credit, and home value — none of which are guaranteed.
- Should I pay down principal during the draw period?
- If you can, yes, and it is the single most effective thing you can do. Payments above the interest-only minimum reduce the balance directly, which lowers both the interest you pay during the draw and the amortizing payment that starts afterwards. Treating the interest-only minimum as the actual payment is what creates the shock.
- Do all HELOCs have interest-only draw periods?
- Most do, but not all. Some lenders require a minimum payment of interest plus 1 percent of the balance, or interest plus a small principal component, during the draw period. Check your agreement, because the structure determines how much principal is left standing when the repayment period begins.
- What happens if my rate rises during the repayment period?
- Your payment recalculates, since the balance must still amortize by the end of the term. Unlike a fixed loan, there is no cushion — a rate rise during repayment feeds straight into the monthly figure. This is why borrowers who reach repayment with a large balance during a rising-rate cycle get squeezed from both directions.
- Is a balloon at the end of the draw period possible?
- Yes, on some older or non-standard lines. Instead of a repayment period, the entire outstanding balance falls due when the draw period ends. That is a fundamentally different and far riskier product than a HELOC with a 20-year repayment phase, and it is worth confirming which one you have long before the date arrives.
- How far ahead should I plan for the transition?
- At least two years. That gives you time to pay down principal, refinance while your credit and equity still support it, or restructure before the payment changes. Lenders are required to notify you of the upcoming change, but the notice often arrives with only months to spare, which is not enough time to act well.
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