HELOC Draw vs. Repayment: Why Payments Jump 3×
A 10-year draw at 9% on $40,000 costs $300/mo interest-only — comfortable. Then the 15-year repayment starts: $406/mo of principal + interest for 15 years. Same debt, 35% higher payment, and that’s before any rate rise.
Budget the repayment, not the draw
Lenders qualify you on the fully-amortized payment, and you should too. Add the +2% stress line from our HELOC calculator to your budget: $40,000 at 11% repays at ~$455/mo. If that breaks the plan, draw less.
Three ways to soften the jump
- Pay principal during the draw even when only interest is due — every $1,000 prepaid skips ~$1,700 of lifetime interest at 9%.
- Shorten the draw mentally: treat year 7 as your deadline and amortize toward it.
- Keep utilization under 50% of the line — high utilization plus a rate rise is the double-hit that causes defaults.
Questions, answered
Can I still borrow during repayment?
No — the line freezes. Some lenders let you refinance into a new draw period, which restarts the clock and the fees.
Are interest-only HELOC payments a trap?
Not automatically — they’re cheap flexibility. The trap is paying only interest for 10 years and meeting the full balance at repayment with no plan.