decorative colored dots

Understanding the Draw and Repayment Periods for a Home Equity Line of Credit (HELOC).

A home equity line of credit (HELOC) functions like a credit card, offering a line of credit based on the equity available in a home. HELOCs offer homeowners flexible access to funds, but it’s essential to understand how their draw and repayment periods work.

During a HELOC’s draw period, typically lasting 5 to 10 years, a homeowner can borrow against the line of credit, repay it, and borrow again. During this draw period, homeowners will pay interest only on the amount they borrow.

After the draw period ends, the HELOC enters the repayment period, which can last 10 to 20 years. During this time, a homeowner typically can no longer draw funds from the line and must start repaying both the principal and the interest on the amount borrowed. This shift marks a significant change in monthly payments, as the HELOC moves from interest-only payments to payments that include the principal of the loan.

NIHFCU’s home loan specialists are here to help explain these phases in detail and assist you in preparing for the changes in your monthly payments. If you have a HELOC or are considering one reach out to us today. We’re here to help.

Speak to a specialist

Rates, fees and terms as of July 15, 2024 and subject to change without notice

Financial wellness begins and ends with the facts. Here’s what you need to know!
All disclosed rates and terms are subject to change without notice.