№ 008 · Mortgage cluster
HELOC Calculator
A home equity line of credit is cheap in the draw years and expensive after — this shows both. Enter your balance, rate, and the two phase lengths to see the interest-only payment now, the amortized payment later, and the payment shock when one becomes the other.
Draw + repayment · payment shock
Comparing ways to tap or trim your mortgage? See the Refinance Calculator or a Mortgage Recast.
Your line of credit01
$
%
The two phases02
Interest-only payment · draw period
$333.33/mo
Jumps to $418.22/mo in repayment$90,372.81 total interest
Draw period · 10 yr
Interest-only payment$333.33/mo
balance stays at $50,000.00
$40,000.00 interest, no principal
$40,000.00 interest, no principal
Repayment · 20 yr+25.47%
Principal + interest$418.22/mo
amortizes to $0
$50,372.81 more interest
$50,372.81 more interest
Interest-only$333.33/mo
Repayment$418.22/mo
Payment shock+$84.89/mo
Total interest$90,372.81
- Balance remaining
| Start | $50,000.00 |
|---|---|
| Year 2.9 | $50,000.00 |
| Year 5.9 | $50,000.00 |
| Year 8.9 | $50,000.00 |
| Year 12.0 | $47,798.62 |
| Year 15.1 | $43,636.32 |
| Year 18.1 | $38,475.69 |
| Year 21.1 | $31,920.47 |
| Year 24.2 | $23,332.85 |
| Year 27.2 | $12,685.47 |
| Year 30.0 | $0.00 |
During the 10-year draw you pay interest only, so the balance never falls. When repayment begins it amortizes to zero over 20 years — and the payment jumps 25.47%. Real HELOC rates are variable, so your actual payments will move with the index.
How it works · methodology
The math, in the open.
Draw period (interest only): payment = balance × (rate ÷ 12) — balance never falls Repayment period (amortized): payment = standard amortization of the balance over the repay term total interest = draw-period interest + repayment-period interest
- balance
- Amount drawn on the line
- rate
- Annual rate (assumed constant here)
- draw term
- Interest-only years
- repay term
- Amortizing years
Assumptions & limits
- Models a single drawn balance held constant through the draw period (interest-only, no extra principal).
- The rate is treated as constant — real HELOCs are variable and tied to the prime rate, so payments will move.
- No annual fees, draw fees, or closing costs are included.
- Assumes the full balance amortizes over the stated repayment term; some HELOCs balloon or differ.
Sources
By the MintNumber Editorial Team·Reviewed
Frequently asked
Questions about HELOCs
What is a HELOC and how does it work?
A home equity line of credit is a revolving loan secured by your home: the lender approves a credit limit based on your equity, and you can borrow, repay, and borrow again up to that limit. It runs in two phases. During the draw period — often ten years — you can take money out and usually pay interest only on what you owe. When the draw period ends, the line closes to new borrowing and you enter the repayment period, paying back the balance with principal and interest over a fixed term.
What is the draw period?
The draw period is the opening stretch — commonly ten years — when you can pull money from the line as needed and your required payment is typically just the interest on the outstanding balance. Because you are paying interest only, the balance does not shrink unless you choose to pay extra toward principal. It is flexible and cheap month to month, which is exactly what lulls some borrowers into trouble when the second phase begins.
What is payment shock?
Payment shock is the jump in your monthly payment when the draw period ends and repayment begins. During the draw you paid only interest; in repayment you must pay down the entire balance plus interest over the remaining term, so the payment can leap substantially — often 25% or more, and sometimes far higher on a short repayment term. Planning for that increase before it arrives is the single most important thing a HELOC borrower can do.
Is a HELOC rate fixed or variable?
Almost always variable. Most HELOCs carry a rate tied to the prime rate plus a margin, so your payment moves as the Federal Reserve changes rates. This calculator uses a single assumed rate to illustrate the payments and the shock, but your real payments will rise and fall over the life of the line. Some lenders let you lock a portion of the balance into a fixed rate — worth asking about if a rising-rate environment worries you.
HELOC vs home equity loan vs cash-out refinance?
All three tap home equity but differ in shape. A HELOC is a revolving line with a variable rate and a draw-then-repay structure — best for ongoing or uncertain needs. A home equity loan is a lump sum at a fixed rate, repaid on a set schedule from day one — best for a known, one-time cost. A cash-out refinance replaces your whole mortgage with a larger one and hands you the difference — best when you also want to change your first mortgage’s rate or term. Compare the total cost of each, not just the monthly payment.
What are the risks?
Your home is the collateral, so falling behind can ultimately mean foreclosure — a HELOC is not the casual credit line its flexibility makes it feel like. The variable rate means payments can rise unexpectedly, the payment shock at repayment can strain a budget, and borrowing against equity reduces the cushion that protects you if home values fall. Borrow only what you can comfortably repay under the higher repayment-period payment, not just the easy interest-only one.