HELOC Calculator
Drawn balance and rate — the interest-only payment during the draw period.
How this is calculated
interest-only payment = balance × (rate ÷ 12)
Worked example: $50,000 at 8.5% → about $354/month in interest during the draw period, with the $50,000 still owing. Budget for the repayment phase, when principal is added.
Use it with eyes open
A HELOC is secured against your home — the flexibility is real, but so is the risk. Draw deliberately, and model the repayment-phase payment before you rely on it.
A revolving loan secured on your house
A home equity line of credit behaves like a credit card with your home as security. You are approved for a limit, draw what you need, and pay interest only on the drawn balance. That flexibility is genuinely useful for staged costs — a renovation billed in phases, a business with lumpy cash flow — and it is the reason the product carries lower rates than unsecured borrowing. The security is the difference, and it is not a small one.
The two phases, and the payment shock between them
Most lines run a draw period, commonly ten years, during which you may borrow and are often required to pay interest only. Then the repayment period begins: no further drawing, and the balance amortises over the remaining term. The transition can more than double the monthly payment overnight, and it arrives on a schedule set at the start that borrowers routinely forget. Model the repayment-period figure before you draw, not after.
Variable rates, and how the limit can move
Lines are usually variable, priced against a reference rate, so the payment moves with policy. Some agreements also let the lender reduce or freeze the limit if property values fall or your circumstances change — which means the facility can be least available exactly when it is most needed. Read the clauses on suspension and reduction before treating a line as an emergency fund.
What secured borrowing really trades
Consolidating expensive unsecured debt into a line at a lower rate is arithmetically attractive and converts debt that could ultimately be written off into debt secured against your home. Borrowing against equity to fund consumption spreads a short pleasure across a long term. The honest test is whether you would sign the same amount as an unsecured loan at an unsecured rate; if not, the low rate is doing the persuading rather than the purpose.
Frequently asked questions
Is this the full payment?
During the draw period, a HELOC usually requires interest only — this is that payment. It does not reduce the balance. When the repayment period begins, payments jump to cover principal too, often significantly.
Why do HELOC payments change?
HELOC rates are typically variable, tied to a benchmark like the prime rate, so the payment moves as rates move. And the shift from interest-only to principal-and-interest can double the payment overnight — plan for both.