HELOC Payoff Calculator

A home equity line of credit (HELOC) can make it difficult to determine your payments or how long it will take to pay your loan off. Because HELOCs are adjustable-rate loans during their draw period, the rate can fluctuate, sending your payments up or down. 

This calculator shows you your line of credit amortization schedule. In other words, you can calculate how many months it will take you to pay off your HELOC, even if you want to make additional payments or future draws from your line. 

About HELOC Loans 

A home equity line of credit, or HELOC, allows homeowners to borrow cash against the equity they’ve built in their homes by giving them a line of credit with a specific limit they can repay over time. 

A HELOC is like having a credit card secured by your home equity but with a much lower interest rate than you can get with a credit card or other unsecured loan. Since home equity loans are a type of mortgage, the interest you pay is tax-deductible up to certain limits.

So, how much can you borrow? Our home equity loan calculator can help you see how big of a loan you can secure with your available home equity. 

Home Equity Line of Credit (HELOC) vs. Home Equity Loan 

HELOCs and Home Equity Loans are both loan types that allow homeowners to borrow against the equity in their homes. However, HELOCs and home equity loans have distinct differences

HELOCs operate like a credit card with a predetermined credit limit, allowing borrowers to withdraw funds as needed during a draw period. On the other hand, home equity loans provide borrowers with a lump sum upfront, usually with a fixed interest rate and a fixed repayment term, commonly ranging from 5 to 30 years. 

With a HELOC, borrowers only have to make interest payments at first, whereas with a home equity loan, borrowers receive the entire loan amount at once and begin repaying both the principal and interest immediately. 

Use our HELOC and Home Equity Loan calculator to see which loan type would suit you better.  

How Does HELOC Repayment Work? 

A HELOC has two phases.

Phase 1 is the draw period, where you can borrow against the line of credit as you wish. 

HELOCs function as interest-only loans during the draw phase, which usually lasts for 5 to 10 years. In other words, you’re only required to pay the interest charges during this time and don’t have to repay any loan principal. 

Phase 2 is the repayment period during which you must repay the borrowed money. The repayment phase usually lasts 10 to 20 years, and you cannot borrow additional funds during this time. Monthly payments in the repayment period include both principal and interest, and the interest rate may still be variable, leading to potential fluctuations in the payment amounts. 

Many borrowers refinance into a new HELOC at the end of the draw period. Some borrowers refinance to avoid the shock of the higher monthly payments required to repay both loan principal and ongoing interest charges. Other borrowers refinance to keep their line of credit open.

How to Pay off a HELOC Faster

One of the advantages of HELOCs is that they typically do not have prepayment penalties.  

Here are some strategies you can use to pay off your HELOC faster: 

  1. Increase Payment Amount: While you do not have to repay the principal during an interest-only draw phase of a HELOC, you can do so without penalty. This reduces what you have to repay when the draw period ends. 
  2. Make Extra Payments: Instead of monthly payments, you could switch to a biweekly payment schedule. Biweekly payments means making 26 half-payments each year, effectively equating to 13 monthly payments. Over time, this can significantly reduce the overall repayment period. Use our Bi-Weekly Payment Calculator to see how much you could save by switching your payment schedule. 
  3. Refinance to a Fixed-Rate Loan: If interest rates have risen or if you prefer stability in your payments, consider refinancing your HELOC into a fixed-rate home equity loan. This allows you to lock in a consistent interest rate, potentially saving money on interest over the long term.