How it works

A useful distinction

A longer draw period delays principal repayment

Extending an interest-only draw period does not reduce the balance entering repayment in this model. Compare total draw-period interest as well as the later payment; lower initial obligations can postpone rather than resolve the debt.

Planning for the HELOC repayment period

A HELOC can have different payment behavior during the draw period and the repayment period. Compare both stages instead of using the initial payment as a long-term budget. The account-fee mode lets you include supported recurring charges. The estimate follows the entered balance and rate assumptions; future draws and a changing interest rate can alter the amount ultimately repaid.

Draw & repayment: formula and assumptions

During an interest-only draw: payment = balance×rate/12. Repayment then amortizes the balance.

Assumes a fully drawn, constant balance and unchanged interest rate. Actual HELOC rates and draws can change.

Available home equity: formula and assumptions

Additional borrowing=max(0,home value×maximum combined LTV−existing debt).

Borrowing capacity does not guarantee lender approval. Net cash deducts the entered closing fees.

Draw, repayment & annual account fees: formula and assumptions

Total cash = draw-period interest + amortized repayment + separately paid annual account fees.

Fees are collected in months 1, 13, 25 and subsequent account anniversaries. Assumes a constant drawn balance and fixed rate; future draws and rate resets are excluded.

Worked example

Reference example currency: USD. These fixed examples do not change with your calculator preferences.

Using the Draw & repayment example:

Inputs

Loan amount ($): 250000
Annual interest rate (%): 6.5
Draw period (years): 10
Repayment period (years): 20

Method

During an interest-only draw: payment = balance×rate/12. Repayment then amortizes the balance.

Result

Example result

Interest-only draw payment: $1,354.17

Monthly repayment payment: $1,863.93

Interest during draw period: $162,500.00

These are illustrative inputs. Change the values to explore a different scenario.

Formula references

References explain the underlying methods; they do not imply endorsement or individual professional review of Finflo.

Common questions

Why does the payment rise after an interest-only draw period?

The repayment phase begins paying down principal as well as interest, over the remaining amortization term.

Does the model track changing draws and variable HELOC rates?

No. It assumes a fully drawn, constant balance during the draw period and an unchanged interest rate.

Prepared by Finflo. See our methodology and editorial policy. Read the relevant professional-advice limitations.

Home Equity Line of Credit (HELOC) Calculator

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