HELOC Calculator

The two phases of a HELOC

During the draw period (usually 10 years) you can borrow, repay and re-borrow, paying interest only on the balance — on $40,000 at 8.5%, just $283 a month. It feels cheap because it is incomplete. When the draw period ends, the line closes and the balance amortizes over the repayment period (usually 20 years): the same balance then costs about $347 a month — and if you have drawn the full $100,000 in the meantime, around $868. Borrowers who max the line late in the draw period get the rudest shock.

HELOC vs home equity loan vs cash-out refinance

• HELOC: variable rate, flexible draws, interest-only phase — best for phased projects like renovations.
• Home equity loan: fixed rate, lump sum, amortizing from day one — best for one known expense.
• Cash-out refinance: replaces your whole mortgage — only sensible when the new first-mortgage rate is competitive; model it in the refinance calculator.

The risks that deserve respect

The rate is variable — HELOCs track the prime rate, which can move fast. Your home secures the line, so missed payments risk foreclosure in a way credit cards never do. And lenders can freeze or reduce unused lines when home values fall, as happened widely in 2008–09. Keep draws purposeful, repay principal during the draw period whenever you can, and stress-test the payment at rates 2–3% higher with the fields above. For a different equity option for seniors, see the reverse mortgage calculator.