Repayment phase only — during the draw period you may pay interest only. Each row totals the principal and interest paid that year and the balance remaining at year-end.
Period
Principal paid
Interest paid
Ending balance
Year 1
749
3,570
39,251
Year 2
819
3,499
38,432
Year 3
896
3,422
37,535
Year 4
980
3,338
36,555
Year 5
1,072
3,246
35,483
Year 6
1,173
3,146
34,310
Year 7
1,283
3,036
33,027
Year 8
1,403
2,915
31,624
Year 9
1,535
2,784
30,089
Year 10
1,679
2,640
28,410
Year 11
1,836
2,482
26,574
Year 12
2,009
2,310
24,566
Year 13
2,197
2,122
22,369
Year 14
2,403
1,916
19,966
Year 15
2,628
1,690
17,337
Year 16
2,875
1,444
14,462
Year 17
3,145
1,174
11,317
Year 18
3,440
879
7,878
Year 19
3,762
556
4,115
Year 20
4,115
203
0
Estimates only — not financial, tax, or professional advice.
Calculated in your browser — the numbers you enter are never sent to our servers.
What it calculates: Draw Period (interest-only), Repayment Period Payment, Payment Increase at Repayment, Total Interest (repayment period).
$300 a month becomes $359.89 — and every dollar of the balance is still there
During the draw period a HELOC typically requires interest only. On $40,000 at 9% that is $300 a month, and it retires no principal whatsoever: pay it faithfully for ten years and you still owe $40,000. When the repayment period begins, the same balance must be amortised over the remaining term, lifting the payment to $359.89 for twenty years.
Draw period: interest only = balance × (rate/12) | Repayment: amortized over remaining years
The $59.89 increase here is mild because the repayment term is long and the balance modest. Shorten the repayment period to ten years and the payment jumps to $506.70 — a 69% rise. The general rule is that the shorter the repayment window and the larger the drawn balance, the more severe the reset, and borrowers who treat the interest-only payment as the cost of the loan are the ones most surprised by it.
HELOCs are usually tied to Prime, so the payment can rise without you borrowing a cent more
Most home equity lines carry a variable rate set as Prime plus a margin. When the benchmark moves, the interest-only payment moves with it immediately. At 9% the drawn $40,000 costs $300 a month; at 12% it costs $400, with no change to what you owe. This is the structural difference from a fixed-rate home equity loan, where the payment is known for the full term.
Run the calculator at a rate two or three points above today’s to see what the line costs under stress. If the higher figure is uncomfortable on the interest-only payment alone, the eventual amortising payment at that rate will be considerably worse, and the line is larger than the household can carry.
Ten years of $300 payments is $36,000 that leaves the balance untouched
The total interest figure of $46,374 covers the repayment period alone. Add a ten-year interest-only draw period at $300 a month and another $36,000 goes out before principal repayment even starts — over $82,000 of interest on a $40,000 balance, without a single missed payment.
That is the real cost of the flexibility. Interest-only is genuinely useful for irregular income or for a bridge between two events, because it minimises the required outflow. It is expensive as a default. Paying anything above the interest-only minimum during the draw period reduces the balance that must be amortised later and softens the reset directly.
A HELOC is a mortgage on your home, whatever it is spent on
A home equity line is secured by the property. The rate is lower than a credit card or personal loan precisely because the lender can foreclose, and that trade is easy to forget when the money is drawn through a card or a cheque for something that feels unrelated to the house. Consolidating unsecured debt into a HELOC converts debt that could be discharged or negotiated into debt secured against where you live.
Lenders also retain rights over the line itself. Most agreements allow the credit limit to be reduced or the line frozen if property values fall or the borrower’s circumstances change — which is what happened at scale in 2008, when many lines were cut just as households most wanted access to them. A HELOC is a useful facility, but it is not the same as savings.
One balance, one rate, and a clean handover between the two periods
The calculation treats the drawn balance as fixed. Real lines are revolving: you can draw more, repay, and draw again, and each movement changes the interest-only payment. It also assumes the rate holds constant through both periods, which no variable-rate product guarantees, and applies no annual fee, draw fee or inactivity charge.
Some agreements end the draw period with a balloon payment rather than an amortisation schedule, requiring the whole balance at once or a refinance to clear it. Check which structure your line uses before relying on any projection — the difference between amortising over twenty years and repaying in full on a single date is not a detail.
Frequently Asked Questions
What happens when the HELOC draw period ends?
After the draw period (often around 10 years), you can no longer draw funds and must begin repaying the balance. Payments typically jump, because you now cover both principal and interest instead of interest alone. The repayment schedule below shows how that phase pays down.
What is the difference between the draw period and the repayment period?
During the draw period you can borrow against the line and usually pay interest only on what you have drawn. During the repayment period the line closes to new borrowing and you pay down the balance in amortizing installments. This calculator shows the interest-only draw payment and the larger repayment payment.
Why does my HELOC payment jump after the draw period?
In the draw period your payment may cover only interest, so the balance stays flat. When repayment begins, each payment must also retire principal within the remaining term, which raises the amount due, sometimes sharply. Planning for that increase ahead of time avoids a shock.
Are HELOC rates fixed or variable?
Most HELOCs carry a variable rate tied to an index such as the prime rate, so your payment can rise or fall as that index moves. This calculator uses a single rate for clarity; in practice, build in room for the rate to change.
How is a HELOC different from a home equity loan?
A home equity loan is a lump sum at a fixed rate with predictable payments. A HELOC is a revolving line you draw from as needed, usually at a variable rate. The line offers flexibility; the loan offers certainty. Both are secured by your home.
What are the risks of a HELOC?
Because the line is secured by your home, missed payments can put the property at risk. A variable rate means payments can climb, and the jump from interest-only to full repayment can strain a budget. Borrowing only what you can repay, and leaving an equity cushion, reduces these risks.
How can I prepare for the repayment phase?
You can pay down principal during the draw period rather than paying interest only, set aside savings for the higher payment, or talk to your lender about refinancing options before the draw period ends. Knowing the future payment in advance, as shown here, makes planning easier.
Sources & References
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Results are estimates based on the figures you enter and standard formulas. Rates, fees, taxes, and lender terms vary and change over time, so confirm important numbers with your lender or a qualified professional. This is educational information, not financial advice.
Published the calculator with its formula, worked example, assumptions, limitations and FAQs, and added an automated formula test suite covering it.
Confirmed by simulation that draw-period payments leave the balance exactly unchanged, which is what makes the step-up to the repayment payment the number worth showing.
Frequently Asked Questions now show on the page: 7 answers, checked in a page-by-page audit.
What the calculation assumes and where it stops now show on the page.
Show it to your clients, not just tell them
Mortgage brokers, accountants, and advisors embed this to walk clients through the numbers live — nothing they enter ever leaves their browser.