The interest-only trap
HELOCs are designed to feel cheap: during the draw period, the required payment is usually interest only. On a $50,000 balance at 8.5%, that minimum is about $354 a month — and after ten years of paying it faithfully, you would still owe exactly $50,000. Every dollar you pay above the accrued interest is what actually retires the debt. This calculator shows where your current payment really puts you, and how much an extra monthly amount accelerates the finish line.
How to pay a HELOC off faster
- Fix a real payment, not the minimum. Decide on a flat monthly amount well above interest-only and automate it.
- Send windfalls to principal. Because HELOC interest accrues on the current balance, a lump sum saves interest from the very next day.
- Beat the reset. If your draw period ends soon, use the calculator to find the payment that clears (or substantially reduces) the balance before repayment-phase payments kick in.
- Watch the rate. HELOC rates float with the prime rate. If rates climb, your interest-only minimum climbs too — rerun the numbers whenever your statement rate changes.
What this calculator assumes
A constant interest rate at today’s value, monthly compounding, no further draws on the line, and payments applied on time each month. Real HELOCs accrue interest daily and rates move — results are a close estimate, not a payoff quote. Your lender can give you an exact payoff amount on request.
Frequently asked questions
Why does my HELOC balance never seem to go down?
During the draw period, most HELOCs only require interest-only payments. If you pay just the minimum, you cover the interest and nothing touches the principal — the balance stays exactly where it is. To make progress you must pay more than the interest that accrues each month.
What happens when the HELOC draw period ends?
The line converts to the repayment period (typically 10–20 years): you can no longer borrow, and payments jump to include principal. This payment shock can be significant — paying down principal before the draw period ends softens or eliminates it.
Are HELOC rates fixed or variable?
Most HELOCs have variable rates tied to the prime rate, so your rate moves when the Federal Reserve moves. This calculator assumes your current rate stays constant — treat the result as a snapshot, and rerun it when your rate changes. Some lenders offer fixed-rate conversion options on part of the balance.
Is HELOC interest tax-deductible?
Only if the borrowed money was used to buy, build, or substantially improve the home securing the line, and only if you itemize deductions. HELOC funds used for other purposes (debt consolidation, cars, tuition) are not deductible under current rules. Confirm with a tax professional.
Should I pay off my HELOC or my credit cards first?
Almost always the credit cards: their rates are typically two to three times higher than a HELOC. The standard order is highest APR first. One caveat — the HELOC is secured by your home, so never let it slip into missed payments while attacking other debt.