HELOC Payment Calculator

How it works

A home equity line of credit (HELOC) has two stages. During the draw period you can borrow against the line and usually only have to pay the interest on what you owe. During the repayment period you can no longer borrow, and the balance is paid off in equal monthly payments of principal and interest.

The calculator assumes the amount you enter is drawn at the start and stays outstanding for the whole draw period, with interest-only payments. It then spreads that balance over the repayment period like an ordinary loan.

The jump between the two payments is the figure to plan for. Nothing is repaid while you pay interest only, so the full balance has to be repaid in the shorter repayment period, and the payment can rise sharply when the draw period ends.

HELOC rates are usually variable and move with an index such as the prime rate. The projection holds the rate you enter fixed for the whole life of the line, so treat it as one scenario and try a higher rate to see how sensitive the payments are.

Formula

i = annual rate ÷ 12
draw-period payment = balance × i                                   (interest only)
repayment payment   = balance × i × (1 + i)^n ÷ ((1 + i)^n − 1),   n = repayment years × 12
draw interest       = draw payment × draw years × 12
repayment interest  = repayment payment × n − balance
total interest      = draw interest + repayment interest

Example

With $50,000 drawn at 8.5%, a 10-year draw period and a 20-year repayment period, the interest-only payment is $354.17 a month. When repayment starts the payment rises to $433.91, an increase of $79.74.

Interest comes to $42,500.00 over the draw period and $54,138.79 over repayment, a total of $96,638.79 on top of the $50,000 borrowed.

Assumptions and limitations

• HELOCs are usually variable-rate. The rate you enter is held fixed for the whole projection; your actual payments will change when the rate does.
• The amount drawn is assumed to be borrowed at the start and left outstanding through the draw period, with interest-only payments. Further draws and voluntary repayments during the draw period are not modelled.
• Interest accrues monthly at the annual rate ÷ 12 and payments are made at the end of each month. Some lenders calculate interest daily, which gives slightly different figures.
• Annual fees, closing costs, minimum payment floors, rate caps and any balloon payment at the end of the draw period are not included. Check your line's terms.
• Results are an estimate for planning, for informational and educational purposes only, and are not financial, tax or legal advice.

Frequently asked questions