What a HELOC is
A HELOC (Home Equity Line of Credit) is a revolving credit line secured by your home — think of a credit card whose limit is set by your equity, at a far lower rate because your house is collateral. You borrow only what you need, and you pay interest only on what you've actually drawn.
The two phases, and why the second one surprises people
Draw period (typically 10 years): you can borrow freely, and the required payment is usually interest only. On a $60,000 balance at 8.25%, that's about $413 a month — and none of it reduces what you owe.
Repayment period (typically 10–20 years): the line closes, and you must now repay principal and interest on a fixed schedule. That same $60,000 over 20 years jumps to roughly $511 a month; over 10 years it's about $736. The shorter your lender's repayment term, the harder the jump. Because the draw payment never touched principal, the full balance is still sitting there on day one of repayment.
How to defuse the shock
Pay principal during the draw period even though you aren't required to. Every dollar you put toward principal now lowers both the balance that gets amortized later and the interest-only payment in the meantime. Enter an amount in the extra-payment field above to see how much smaller the future payment becomes — the effect is usually larger than people expect, because it compounds against both phases.
Variable rates deserve a stress test
Most HELOCs are tied to the prime rate, so your payment moves when rates move. This calculator holds the rate flat for clarity. A sensible habit: run it once at your current rate, then again 2–3 percentage points higher, and confirm you could still afford the repayment-period payment in that scenario. Check your agreement for the lifetime rate cap — that's your true worst case.
The risk worth naming
A HELOC is secured by your home. Unlike credit-card debt, falling behind can ultimately mean foreclosure. That's the reason for the low rate, and it's the reason to size the balance against a payment you'd still manage in a bad year. This is a math tool, not financial advice — talk to a qualified professional about your situation.