Last reviewed: October 15, 2026
A HELOC usually has two lives. In the first, the draw period, you can borrow, repay, and borrow again, and the required payment is often small. In the second, the repayment period, you can no longer borrow and the payment has to pay the balance down to zero. The jump between the two is often called payment shock, and it catches borrowers who planned only for the first phase. This guide shows the arithmetic with a $50,000 example so you can see how large the jump can be.
The Consumer Financial Protection Bureau explains that during the draw period you can generally borrow up to your credit limit, and gives 10 years as an example length. Once the draw period ends, the lender may set a schedule so you repay the full balance, often over ten or 20 years, and payments are often much higher in repayment. The CFPB also notes that some lenders require the full amount to be repaid when repayment begins. HELOCs also usually carry a variable interest rate, so payments can change from month to month. Your own plan may differ, so the first step is always to read the agreement for the actual lengths and payment rules. (Source: consumerfinance.gov, "What is a home equity line of credit (HELOC)?", last reviewed August 28, 2026.)
Assume you draw $50,000 for a renovation and keep that balance. For illustration we use an 8% annual rate. This is not a current market rate or a prediction; it is a round number that makes the math easy to follow.
If your plan lets you pay only interest during the draw period, the monthly payment is the balance times the monthly rate: $50,000 × (0.08 ÷ 12) = $333.33. Your balance stays at $50,000, because none of the payment reduces principal.
Now suppose the draw period ends and the plan converts to a 20-year repayment schedule at the same 8%. The standard loan payment formula gives about $418.22 a month for $50,000 over 240 months. That is $84.89 more each month, about 25% higher, at an unchanged rate.
If instead the lender gives you 10 years to repay, the payment on the same balance is about $606.64, which is 82% higher than the interest-only payment.
Because most HELOC rates move with an index, the rate in repayment may not be the rate you started with. If the rate has risen two percentage points to 10% by the time repayment starts, the interest-only payment on $50,000 would have been $416.67, and the 20-year repayment payment becomes about $482.51. Compared with the $333.33 you were used to, that is $149.18 more every month, a 45% increase, even though you borrowed nothing extra.
| Scenario ($50,000 balance) | Monthly payment |
|---|---|
| Draw period, interest only at 8% | $333.33 |
| 20-year repayment at 8% | $418.22 |
| 10-year repayment at 8% | $606.64 |
| Draw period, interest only at 10% | $416.67 |
| 20-year repayment at 10% | $482.51 |
A HELOC is secured by your home. The CFPB states that if you fall behind or cannot repay on schedule, you could lose your home. If you see trouble coming, contact your lender early to ask about options before payments are missed, and consider speaking with a HUD-approved housing counselor, a free or low-cost service listed at consumerfinance.gov.
A cash-out refinance or a fixed home equity loan has a predictable payment from day one, which removes the surprise but also removes the flexibility of drawing only what you need. Our guide to HELOC vs. cash-out refinance explains the trade-offs.