HELOC Payment Calculator
Estimate your Home Equity Line of Credit payments during draw and repayment periods.
Estimate Your HELOC Payments
Understanding HELOC Payments
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your home's equity. Unlike a standard loan where you receive a lump sum, a HELOC allows you to borrow funds up to a certain limit, repay it, and borrow again during a specific timeframe called the **Draw Period**.
HELOC Phases: Draw vs. Repayment
- Draw Period:** Typically 5-10 years. During this time:
- You can withdraw funds as needed, up to your credit limit.
- Payments are often **interest-only** based on the outstanding balance. Some plans might require a small percentage of the balance (e.g., 1%).
- Making only interest payments means the principal balance does not decrease unless you voluntarily pay extra towards it.
- Repayment Period:** Follows the draw period, often lasting 10-20 years. During this time:
- You can no longer draw funds.
- The outstanding balance at the end of the draw period is converted into a fully amortizing loan.
- Payments become **Principal and Interest (P&I)**, calculated to pay off the remaining balance over the repayment term.
- These P&I payments are usually significantly higher than the interest-only payments during the draw period.
Risks to Consider
- Fluctuating Payments: Variable rates make budgeting challenging as payments can rise.
- Payment Shock: The jump from interest-only payments (draw period) to fully amortized P&I payments (repayment period) can be substantial and catch borrowers unprepared.
- Home as Collateral: Since the HELOC is secured by your home, failure to make payments could lead to foreclosure.
- Changing Balances: Your actual payments during the draw period will depend on your outstanding balance each month, which can change frequently.
How to Use This Calculator
- Enter the estimated Amount Drawn – the balance you anticipate carrying on the HELOC.
- Input the estimated Annual Interest Rate (APR). Remember this is usually variable.
- Enter the length of the Draw Period in Years.
- Enter the length of the Repayment Period in Years (this starts *after* the draw period ends).
- Click "Calculate Payments".
- The results provide estimates for the interest-only payment (draw phase) and the principal & interest payment (repayment phase), based on the *initial amount drawn* and the fixed rate entered. It also gives a rough estimate of total interest and total paid, assuming the balance and rate remain constant for the calculation.
Disclaimer: This calculator provides **estimates only** based on the inputs provided and assumes a fixed interest rate and a constant drawn balance for calculation purposes. Actual HELOC payments will vary due to fluctuating variable interest rates and changes in the outstanding balance. It does not account for fees. Consult your lender for specific terms, conditions, and payment details.
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