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HELOC Payment Shock: What Happens When Your Draw Period Ends
When your HELOC draw period ends, your payment can double or more overnight. Use this calculator to see exactly how much your payment will increase and plan ahead.
Before (Draw Period)
Interest only
$468.00
per month
After (Repayment)
Principal + interest
$621.20
per month
Payment Shock
Monthly increase
+$153.20
+33% increase
Payment Shock at Different Balances
At the current average rate of 7.02% with a 20-year repayment period:
| Balance | Interest-Only | Repayment | Increase |
|---|---|---|---|
| $50,000 | $292.50 | $388.25 | +$95.75 |
| $75,000 | $438.75 | $582.37 | +$143.62 |
| $100,000 | $585.00 | $776.50 | +$191.50 |
| $150,000 | $877.50 | $1,164.75 | +$287.25 |
| $200,000 | $1,170.00 | $1,553.00 | +$383.00 |
Reduce Your Payment Shock
See how extra payments during the draw period reduce your repayment shock.
What Is HELOC Payment Shock?
Payment shock is the sudden increase in your monthly HELOC payment when you transition from the draw period to the repayment period. During the draw period, most lenders only require interest-only payments. When repayment begins, you must pay both principal and interest on the remaining balance, which can more than double your monthly obligation.
The severity of payment shock depends on three factors: your outstanding balance, your interest rate, and the length of your repayment period. A shorter repayment period means higher monthly payments but less total interest. A longer period spreads the payments out but costs more overall.
Five Strategies to Reduce Payment Shock
Pay Extra Principal During the Draw Period
Even $100 to $200 per month toward principal during the draw period can significantly reduce your balance before repayment starts. Use the early payoff calculator above to see the impact of extra payments on your future repayment amount.
Refinance Into a New HELOC
Opening a new HELOC before your current one enters repayment resets the draw period. This gives you another 5 to 10 years of interest-only payments. However, you are not reducing your debt, and refinance costs ($0 to $500) may apply. This strategy works best when you need more time but have a plan to pay down the balance.
Convert to a Fixed-Rate Home Equity Loan
A home equity loan gives you a fixed rate and fixed monthly payment. While the payment may still be higher than your interest-only HELOC payment, it eliminates the variable rate risk and gives you predictability. Current average home equity loan rates run about 0.5% to 1% higher than HELOC rates.
Cash-Out Refinance Your First Mortgage
If mortgage rates have dropped since your original loan, a cash-out refinance can pay off both your mortgage and HELOC into a single, lower-rate loan. This only makes sense if the new mortgage rate is competitive with your current rates.
Request a Loan Modification
Some lenders will extend the repayment period or temporarily reduce payments if you contact them before the transition. This is most common with bank-held HELOCs rather than securitized ones. Contact your lender 6 to 12 months before your draw period ends to discuss options.
When to Act: Planning Timeline
2 Years Before
Review your current balance and remaining draw period. Start making extra principal payments if possible. Research current rates and refinance options.
1 Year Before
Shop refinance options from at least three lenders. Get rate quotes for new HELOCs, home equity loans, and mortgage refinances. Compare total costs.
6 Months Before
Apply for the best alternative product. Allow time for appraisal, underwriting, and closing. Aim to close the new product before your draw period ends.
3 Months Before
If refinancing, finalize and close. If staying with current HELOC, prepare your budget for the higher payment. Set up automatic payments at the new amount.