Understanding the heloc calculator
A home equity line of credit (HELOC) is a revolving credit line secured by your home. During the draw period often ten years you can borrow and repay freely, and many HELOCs require only interest payments, which keeps the monthly cost low. Rates are usually variable, tied to the prime rate.
The surprise for many borrowers is the transition to the repayment period, when the line closes and the balance must be amortized over the remaining years. Because principal is now included, the payment can jump sharply the figure above shows by how much. Planning for that increase, or paying down principal during the draw period, avoids the payment shock.
Results are estimates for education only and are not financial advice.