What will your HELOC cost during the draw period — and how much will monthly payments increase when repayment begins?

During the draw period (typically 5 to 10 years), you can borrow from your credit line up to the limit, repay, and borrow again. Monthly payments during this phase are usually interest only on the outstanding balance — the principal does not decrease unless you make additional payments. When the draw period ends, the line closes to new borrowing and the outstanding balance enters the repayment period, during which fixed monthly payments cover both principal and interest until the balance is paid off. The repayment period typically runs 10 to 20 years. The transition from draw to repayment can significantly increase the monthly payment.

During the draw period, interest accrues daily on the outstanding balance and is billed monthly. The monthly interest charge is approximately: outstanding balance multiplied by the daily periodic rate (annual rate divided by 365), multiplied by the number of days in the billing cycle. For estimation purposes, this calculator uses a simplified monthly rate (annual rate divided by 12) applied to the outstanding balance — a standard approximation. The exact amount on your statement may differ slightly depending on billing cycle length and how your lender applies daily versus monthly compounding.

When the draw period ends, the ability to borrow new funds stops and the full outstanding balance converts to a repayment schedule. The lender amortizes the balance over the repayment period — typically 10 to 20 years — producing a fixed monthly payment that includes both principal and interest. This payment is almost always higher than the interest-only draw-period payment, and the difference can be substantial. For example, a $50,000 balance at 7.5% generates a $312.50 interest-only payment during the draw period, but a $402.80 fully amortized payment over a 20-year repayment period. Planning for this transition before it occurs reduces the risk of budget disruption.