HELOC repayment has two phases: the draw period (interest-only payments) and the repayment period (full principal + interest). Many homeowners are caught off guard when payments jump. Here's what to expect and how to prepare. Dream Financial Management since 1994.
10 Years (Typically)
You can draw funds as needed up to your credit limit. Most lenders require interest-only minimum payments during this period. You can pay down principal anytime and re-draw — it's revolving.
Example: $75,000 HELOC balance at 8%
$500/month
Interest-only payment during draw period
20 Years (Typically)
No more draws allowed. The remaining balance is amortized over the repayment term. Payments increase significantly because you're now paying principal + interest.
Example: $75,000 HELOC balance at 8%
$628/month
+26% payment increase over interest-only
When the draw period ends, your payment can increase 25-100%+ as amortization begins — plus any rate increases over the decade. If you only paid interest during the draw period, you still owe the full principal. Plan ahead: consider paying down principal during the draw period voluntarily. Options to manage payment shock: refinance into a new HELOC, cash-out refinance, home equity loan conversion, or negotiate with your lender.
Dream Financial Management helps you plan for HELOC repayment — including refinancing options if payments become unaffordable. Since 1994.
Plan Repayment — Free Consultation