What Happens When Your HELOC's Draw Period Ends

If you took out a home equity line of credit (HELOC) years ago, there's a good chance you've gotten comfortable with a small, manageable monthly payment. What a lot of homeowners don't realize is that the payment they've been making may only be covering the interest — and at some point, often ten years in, that changes. The payment jump that follows can be significant, and it's one of the most common things that quietly pushes a homeowner from financially stable to falling behind.

The two phases of a HELOC

Most HELOCs are structured in two distinct periods:

• The draw period — typically the first 5 to 10 years. You can borrow against your line of credit as needed, and your required payment is often interest-only, calculated just on what you've actually borrowed.
• The repayment period — once the draw period ends, you generally can't borrow any more, and the loan converts to fully amortizing payments covering both principal and interest, often over the remaining 10 to 20 years of the loan.

Why the payment jump can be so dramatic

Going from interest-only to principal-and-interest is one thing. But because that new payment often has to pay off the full balance over a shorter remaining term than a typical mortgage, the math can work against you in a big way. A payment that was $300 or $400 a month during the draw period can turn into $800, $1,000, or more once repayment begins — with no change in your income to match it.

How to find out when yours ends

• Check your original HELOC agreement. It will specify the exact length of the draw period and when repayment begins.
• Look at your monthly statement. Many servicers list the draw period end date directly on your statement, sometimes months in advance.
• Call your servicer directly if you're not sure — ask specifically for your draw period end date and what your estimated repayment-period payment would be.

What to do before it happens

• Ask your lender about extending the draw period or restructuring the line — some lenders offer this, especially for a borrower in good standing.
• Consider refinancing the HELOC into a fixed-rate home equity loan or folding it into your primary mortgage, which can lock in a predictable, often lower payment before the conversion hits.
• Pay down principal during the draw period if you're able to — every dollar reduces what has to be repaid on the tighter repayment-period schedule.
• Budget for the new payment now, even if the switch is a year or two away — it's much easier to prepare gradually than to react in the month it happens.

If the repayment period already started and the new payment isn't sustainable

Don't wait until you've missed payments to act. Contact your servicer and explain your situation — options like a loan modification, an extended repayment term, or refinancing may still be on the table if you reach out early. This is exactly the kind of situation my other article on falling behind on a second mortgage or HELOC walks through in more detail.

Getting the right help

Your specific HELOC's terms, your draw period end date, and what refinancing or restructuring options are realistically available to you depend on your loan documents and your lender. I can help you read your HELOC agreement, understand what's coming, and figure out which path makes the most sense before the payment change catches you off guard — at no cost.