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A home equity line of credit (HELOC) works differently from a standard loan — it has two distinct phases: an interest-only draw period, followed by an amortizing repayment period.
This calculator estimates your monthly payment during each phase, assuming the full credit line is drawn at the start.
How it works
Enter your credit limit (assumed fully drawn), interest rate, draw period length, and repayment period length. During the draw period, the calculator computes an interest-only payment; during repayment, it amortizes the full balance using the standard loan payment formula.
- Enter credit limit / amount drawn ($).
- Enter annual interest rate (%).
- Enter draw period (years).
- Enter repayment period (years).
- Click Calculate to see your results.
Examples
$50,000 HELOC, 8.5%, 10-year draw, 20-year repayment
A fully-drawn $50,000 HELOC at 8.5% has a $354.17 interest-only payment during the 10-year draw period, then a $433.91 payment during the 20-year repayment period.
Who should use it
- Estimating monthly payments before opening a HELOC for a home renovation.
- Comparing a HELOC's total cost against a home equity loan or cash-out refinance.
Industry applications
- Mortgage and home equity lending
- Personal finance and home improvement planning
Advantages
- Models both distinct HELOC phases (interest-only draw and amortizing repayment) separately.
- Shows total interest paid over the full life of the credit line.
Limitations
- Assumes a fixed interest rate and the full credit limit drawn upfront — real HELOCs are usually variable-rate and drawn flexibly over time.
Common mistakes to avoid
- Assuming the draw period payment estimate will stay the same into the repayment period — it doesn't, since repayment requires paying down principal too.
- Forgetting that most HELOCs carry a variable rate, so actual payments may differ from this fixed-rate estimate over time.
Best practices
- Budget for the higher repayment period payment in advance, not just the lower interest-only draw period payment.
Tips
- Making extra principal payments during the draw period (even though only interest is required) can significantly reduce the repayment period payment later.