What happens when my HELOC draw period ends?

When the draw period ends (typically after 10 years), your HELOC enters the repayment period. Your payment switches from interest-only to principal + interest, which can double or triple your monthly payment. This is called 'payment shock.' For example, a $75,000 HELOC at 8.5% might go from $531/month (interest-only) to $1,400+/month during repayment.

What is the fastest way to pay off a HELOC?

The fastest way is to make aggressive principal payments during the draw period while your payment is still interest-only. Even an extra $300-500/month can dramatically reduce your payoff time. Another option is to refinance into a fixed-rate home equity loan or do a cash-out refinance to lock in a lower rate.

Should I refinance my HELOC?

Consider refinancing if: (1) your draw period is ending and you face payment shock, (2) rates have dropped since you opened the HELOC, (3) you want the certainty of a fixed rate, or (4) you want to extend your repayment timeline to lower monthly payments. Compare the total interest cost of refinancing vs. your current payoff plan.

Free Payoff Tool

HELOC Payoff Strategy Planner

Compare 5 payoff strategies for your HELOC. See your payment shock warning and find the strategy that saves you the most interest.

Your HELOC

Current Balance$10,000 – $500,000

Current Rate5.0% – 15.0%

Minimum Payment$100 – $5,000

Timeline & Extra

Extra Monthly Amount$0 – $3,000

Draw Period Remaining0 years – 10 years

years

Repayment Period5 years – 25 years

years

Expected Rate Increase/Year0.0% – 2.0%

Payment Shock Warning

Draw Period Payment

$531

per month now

→

+36%

in 3 years

Repayment Period

$724

per month after

Your payment will jump $193 when the draw period ends

5 Payoff Strategies Compared

Find the best approach for your situation

Minimum Payments

Interest-only during draw, then standard repayment

Monthly

$531

Total Interest

$117,829

Payoff Time

23.0 yrs

Interest Saved

Extra Payment

Add $300/mo extra

Monthly

$831

Total Interest

$71,343

Payoff Time

14.8 yrs

Interest Saved

$46,486

Aggressive Payoff

Lowest Interest

Double your minimum payment

Monthly

$1,062

Total Interest

$36,226

Payoff Time

8.8 yrs

Interest Saved

$81,602

Fixed-Rate HELOC

Refinance to 9.0% fixed, 15-year term

Monthly

$761

Total Interest

$61,926

Payoff Time

15.0 yrs

Interest Saved

$55,903

Cash-Out Refinance

Replace with 6.75% fixed mortgage, 30-year

Monthly

$486

Total Interest

$100,121

Payoff Time

30.0 yrs

Interest Saved

$17,707

HELOC Payoff Strategies Explained

Most HELOCs have a 10-year draw period followed by a 15-20 year repayment period. During the draw period, you enjoy low interest-only payments. But when that period ends, your payment can double or triple overnight as you begin repaying principal. This "payment shock" catches millions of homeowners off guard. Understanding your payoff options now — while you still have time to act — can save you thousands and prevent a financial crisis.

The 5 Payoff Strategies Compared:

Minimum Payments Only: Interest-only during draw, then full amortization during repayment. Lowest cost now, highest total interest paid, and the worst payment shock.
Fixed Extra Payment: Pay your minimum plus a fixed extra amount each month (e.g., $300/month extra). Reduces principal gradually and softens the payment shock transition.
Aggressive Payoff: Dedicate maximum available budget to paying down the HELOC as fast as possible. Lowest total interest paid, but requires significant monthly commitment.
Refinance to Fixed-Rate HELOC: Convert your variable HELOC to a fixed-rate home equity loan. Eliminates rate risk and creates predictable payments, but may have higher starting rate.
Cash-Out Refinance: Roll the HELOC balance into a new first mortgage. Best if your first mortgage rate is already high. Creates one single payment at a potentially lower blended rate.

Understanding Payment Shock:

During Draw Period

Payment type: Interest-only
Example: $75,000 at 8.5%
Monthly payment: ~$531
Principal paid: $0

After Draw Period Ends

Payment type: Principal + Interest
Example: $75,000 at 8.5% over 15 yrs
Monthly payment: ~$739
Payment increase: +39%

If rates rise to 10.5% before repayment begins, the payment could jump to ~$828/month — a 56% increase from the draw period.

Pro Tip: Start Paying Principal Now

Even if your HELOC only requires interest-only payments, adding just $200-$500/month toward principal during the draw period makes a massive difference. It reduces the balance before the repayment period kicks in, which lowers your future payment shock. Think of it as "pre-paying" your shock. If you can afford the full amortized payment now, start making it — your future self will thank you.

Warning: Variable Rate Risk

Most HELOCs have variable rates tied to the prime rate. If the Fed raises rates, your HELOC rate and payment go up automatically. A rate increase of 2% on a $100,000 HELOC adds ~$167/month to your interest-only payment. If your draw period is ending soon AND rates are rising, the combined impact of payment shock plus rate increases can be severe. Consider locking into a fixed-rate product before this double hit occurs.

Related HELOC Tools:

HELOC Calculator — Calculate your HELOC payments during draw and repayment periods.
Equity Unlock Advisor — Compare HELOC vs Home Equity Loan vs Cash-Out Refi for your situation.
Debt Consolidation Calculator — See if consolidating debt into your HELOC saves money.
Refinance vs. HELOC — Side-by-side comparison to decide if refinancing your HELOC makes sense.

Worried About Payment Shock?

Talk to a specialist about refinancing your HELOC into a fixed-rate product before your draw period ends. We can help you explore your options and find the best rate.

Get Help Now Calculate HELOC Payments