HELOC Payment Calculator: The Jump When the Draw Period Ends
A HELOC payment has two phases, so a HELOC payment calculator needs two formulas. During the draw period the monthly payment can be interest only: balance × rate / 12. When the draw period ends, the balance is repaid over a fixed number of years with a level payment, and the payment jumps. On an illustrative $50,000 balance at 8.5%, the interest-only payment is $354.17 a month. When a 20-year repayment period starts, it becomes $433.91 - $79.74 more each month, up 23%. Below are both formulas, what changes the size of the jump, and what extra payments during the draw do to it.
The HELOC monthly payment formulas
During the draw period, interest only:
Payment = balance × annual rate / 12
During the repayment period, a level payment that clears the balance:
i = annual rate / 12
n = repayment years × 12
Payment = balance × i / (1 - (1 + i)^-n)
That second formula is the same one a mortgage or car loan uses. Check your HELOC agreement for which applies to you: some lines set a minimum payment above interest only during the draw, some charge interest by the day, and some require a different repayment schedule. The agreement governs.
Worked example: the HELOC calculator payment, both phases
All figures are illustrative. The rate is an example input, not a market rate or a quote:
- Balance owed: $50,000, drawn at the start and held through the draw
- HELOC rate: 8.5%, so i = 0.007083
- Draw period: 10 years (120 months), interest only
- Repayment period: 20 years (240 months)
Draw period:
$50,000 × 8.5% / 12 = $354.17 a month
Repayment period:
$50,000 × 0.007083 / (1 - (1 + 0.007083)^-240) = $433.91 a month
The jump in the first month of repayment is $433.91 - $354.17 = $79.74.
The non-obvious part: what the jump actually is
In the first month of repayment the interest is the same as the month before, because the balance has not moved: $354.17. The new part of the payment is principal. So the jump is exactly the first month’s principal repayment, $79.74. The draw period did not reduce the balance at all, which is why the payment has to rise to start reducing it.
That also shows where the money went. Over 10 interest-only years this example pays $42,500 of interest and still owes the full $50,000. The 20-year repayment adds another $54,139 of interest, for $96,639 in total - about $1.93 of interest for every dollar borrowed. 44% of that interest is paid before a single dollar of principal.
The repayment period sets the size of the jump
Same $50,000, same 8.5%, only the repayment period changes:
| Repayment period | Payment once repayment starts | Jump from interest-only | Increase |
|---|---|---|---|
| 10 years | $619.93 | $265.76 | 75% |
| 15 years | $492.37 | $138.20 | 39% |
| 20 years | $433.91 | $79.74 | 23% |
A shorter repayment period means a larger jump. With a 10-year repayment, the same balance goes from $354.17 to $619.93 a month. The repayment period is written in your agreement; it is worth finding before the draw period ends rather than on the first statement after.
If the rate rises before repayment starts
HELOC rates are variable, so the rate at the switch may not be the rate you started with. Test a 2-point rise, from 8.5% to 10.5%:
- The interest-only payment becomes $437.50. Each point of rate costs $41.67 a month on this balance.
- The repayment payment becomes $499.19.
- Measured from today’s $354.17, the jump at the switch is now $145.02 instead of $79.74.
That is a test, not a forecast. Your agreement may have a lifetime cap and other limits on how far the rate can move.
HELOC calculator with extra payments
Paying extra principal during the draw period goes straight at the jump. Each extra dollar lowers the balance, so it lowers next month’s interest, and it lowers the balance the repayment payment is calculated on. Same $50,000, same 8.5%, with a fixed extra principal payment every month of the 10-year draw:
| Extra principal each month | Balance when the draw ends | Last draw-period payment | Repayment payment | Change at the switch | Interest saved |
|---|---|---|---|---|---|
| $0 | $50,000 | $354.17 | $433.91 | +$79.74 | $0 |
| $100 | $38,000 | $369.88 | $329.77 | -$40.10 | $18,051 |
| $200 | $26,000 | $385.58 | $225.63 | -$159.95 | $36,102 |
| $400 | $2,000 | $417.00 | $17.36 | -$399.64 | $72,203 |
“Last draw-period payment” is interest plus the extra in the final month of the draw. “Change at the switch” is the repayment payment minus that.
With $200 a month of extra principal, the first draw-period payment is $554.17 instead of $354.17 - more up front. By the end of the draw the balance is $26,000, the last draw-period payment has fallen to $385.58, and the repayment payment is $225.63, which is $208.28 lower than with no extra. Instead of a jump, the payment drops by $159.95 at the switch. You send $24,000 of principal early and save $36,102 of interest over the life of the line.
The jump goes away at a much smaller extra payment than that. In this example, $66.54 a month of extra principal leaves $42,015 owed at the end of the draw, and the repayment payment then equals the last draw-period payment. Anything above that turns the jump into a drop.
Two conditions for this to hold: nothing repaid is drawn again, and the extra goes to principal. If you repay and redraw, the balance at the switch is whatever you owe that month, and that is the number to put in the repayment formula.
How these were calculated
Interest during the draw is charged monthly at the annual rate divided by 12 on the balance at the start of each month; extra principal is paid at the end of each month. The repayment payment is the level-payment formula above over the repayment months, and repayment interest is the total of those payments minus the balance repaid. The rate is held fixed except in the rate-rise test. Fees, closing costs and day-count differences are not included. The extra payment that removes the jump was found by trial and checked against the formula.
Every figure was computed twice: once by the code behind the calculator pack below, and once by an independent month-by-month loop written for this page (which finds each repayment payment by trial rather than by formula). The two agree to the cent before anything is published. The balance and rates are illustrative examples, not market rates or quotes. This is not financial advice; your HELOC agreement and lender disclosures decide the actual terms.
If you want to run the payment jump, available credit, interest-only cost, total interest, a rate rise, extra payments and a HELOC against a cash-out refinance on your own numbers, the spreadsheet pack below has each one as an editable sheet with the formulas visible.