HELOC Repayment Calculator — Draw Period vs. Repayment Period
Estimate how your HELOC payment changes when the interest-only draw period ends and the fully amortizing repayment period begins. See the total interest and payment increase.
HELOC payment change by repayment-period rate
Example: $80,000 credit limit, $40,000 initial draw, no additional draws, 10-year draw period at 9.00%, 20-year repayment period. Values are rounded estimates.
| Repayment-period rate | End-of-draw monthly payment | Start-of-repayment monthly payment | Payment increase |
|---|---|---|---|
| 7.00% | $300 | $310 | +$10 |
| 9.00% | $300 | $360 | +$60 |
| 11.00% | $300 | $413 | +$113 |
How repayment on a HELOC changes
A HELOC — a home equity line of credit — is a credit line secured on the equity in your home, from which you draw only what you need. Repayment comes in two stages: through the **draw period** you as a rule pay interest alone, and through the **repayment period** that follows you clear the balance in level instalments. The payments look light during the draw period only because no principal is coming off; the great pitfall of the product is that the monthly figure jumps the moment the repayment period begins.
Give this tool the credit limit, the initial draw and any monthly further draw, together with the rate and the number of years for each of the two periods, and it sets out **the monthly payment late in the draw period, the payment at the start of the repayment period, and the difference between them**. Alongside come the interest for each period, the balance at the close of the draw period and the total interest. The repayment period is calculated on the assumption that the balance at that close is repaid in level instalments at the new rate.
How to use the HELOC simulator
- Enter the credit limit and the initial draw Give the total line that has been arranged and the amount you take at the outset. The draw must be at least zero and no more than the limit.
- Settle any monthly further draw If you mean to borrow more each month during the draw period, enter that amount; if not, leave it at zero. Further draws swell the balance and make the repayment period heavier.
- Enter the terms of the draw period Give the annual rate and the number of years. Throughout this stretch the payment is interest only.
- Enter the terms of the repayment period Give the rate and the number of years. Since a HELOC is usually at a variable rate, putting a higher figure here than in the draw period gives you a view on the safe side.
- Look at the step in the payment The increase on entering the repayment period is the figure that matters most to a household budget. Whether it is bearable should govern how much you borrow and over how long.
Tips for getting more out of it
- Because the draw period is interest-only, the principal never falls on its own — always check how much the payment jumps the moment repayment begins.
- Most HELOCs carry a variable rate, so run the draw and repayment periods at different rates and see how much a rate increase would add to your payment.
- If you plan additional draws, watch for the point where the balance reaches the credit limit — no further draws are possible once the limit is hit.
- A longer repayment period lowers the monthly payment but increases total interest, so pick a term you can sustain rather than the lowest payment.
Where the HELOC simulator helps
Preparing for life after the draw period
The end of the draw period arrives years hence, so the jump in the monthly figure comes when it has been forgotten. Knowing the difference in advance lets you make the household ready for it.
Allowing for a rise in rates
Most HELOCs carry a variable rate. Put a higher rate on the repayment period and you see the ceiling of how far the payment could climb.
Measuring the effect of further draws
Drawing a little each month leaves the balance larger at the close of the draw period than one expects. Compare the total interest with and without further draws.
Settling how much to borrow
Working back from the repayment-period instalment, you can find the draw the household can bear. There is no obligation to use the whole line.
When you want to weigh a fixed-rate product
For the comparison with a loan paid out in one sum and repaid in level instalments from the start, use HELOC versus home equity loan; for a mortgage repayment plan itself, the loan repayment calculator.
Terms used with a HELOC
- HELOC
- A home equity line of credit: a credit line secured on the equity in a home. You may draw what you need within the limit, and interest runs only on what has been drawn.
- Draw period
- The stretch during which funds may be taken from the line. On most products the payment is interest only, so the principal does not fall unless you draw more.
- Repayment period
- The stretch after the draw period, in which the balance is cleared in level instalments. The monthly figure rises because principal now begins to come off.
- Level instalments
- A method in which the monthly payment stays constant while its composition shifts gradually from interest to principal. The repayment-period figure here is worked out this way.
- Payment shock
- The abrupt rise in the monthly figure on passing from the draw period to the repayment period. It arises because principal is added to what had been an interest-only payment.
- Variable rate
- A rate reset in step with a benchmark. A HELOC is commonly variable in both periods, so the rate at signing is not necessarily the rate that endures.
HELOC questions
Side Note — Watch for HELOC "payment shock"
A HELOC is a revolving credit line secured by home equity — you borrow only what you need, similar to a credit card. Most products have two phases: a draw period, when only interest is due, and a repayment period, when the balance is paid off in full. Because the draw-period payment covers interest only, the principal never shrinks on its own, so the moment the draw period ends and repayment begins, the entire balance must be amortized — often causing the monthly payment to rise sharply. This jump is commonly called "payment shock."
Most HELOCs also carry a variable rate tied to an index such as the prime rate. A rate increase during the draw period raises the interest-only payment, and the rate level when repayment begins has a large effect on the new fully amortizing payment. That is why this calculator lets you enter separate rates for the draw period and the repayment period.
When evaluating a HELOC, it helps to model the draw-period length, the balance you expect at the start of repayment, and the rate you expect at that time together, so you are not surprised by the payment shock. Real contracts differ in rate caps, minimum payments, and fee structures, so confirm the final numbers against the lender's official disclosure.