The Moment
Your HELOC is transitioning from the draw period (where you paid interest only and could borrow more) to the repayment period (where you pay principal and interest on the outstanding balance and can no longer draw).
This transition catches many homeowners off guard. On a $50,000 HELOC at 8.5%, interest-only payments are $354/month. When the repayment period begins (typically 20-year amortization), payments jump to $434/month — and could be higher if rates have risen.
Your Options
Option 1 — Pay down aggressively before the transition. If the transition is 6-12 months away, every dollar you pay toward the HELOC now reduces the balance — and the future payment shock. Redirect any extra cash flow to the HELOC.
Option 2 — Refinance to a fixed-rate home equity loan. Convert the variable-rate HELOC to a fixed-rate home equity loan. This provides payment certainty and may offer a lower rate. Closing costs are typically $2,000-$5,000.
Option 3 — Refinance into your first mortgage (cash-out refi). If mortgage rates have dropped, rolling the HELOC into a cash-out refinance consolidates both debts into one fixed-rate payment. This only makes sense if the new blended rate is lower than your current mortgage + HELOC combined rate.
Option 4 — Absorb the higher payment. If the new payment is manageable within your budget, simply continue paying. The repayment period forces you to pay principal — the balance shrinks every month. This is the simplest approach if cash flow allows.
Run Your Numbers
Enter your HELOC balance to see the repayment period payment.
Mortgage Payoff Planner
What to explore next
- →Should I refinance my HELOC to a fixed-rate loan?
- →Can I roll my HELOC into a mortgage refinance?
- →How do I accelerate HELOC payoff before the transition?
Frequently Asked Questions
Can I extend the draw period?
Some lenders offer a refinance into a new HELOC with a fresh draw period. This restarts the clock but may come with new closing costs and a potentially higher rate. Only extend if you have a genuine need for the credit line — otherwise, entering the repayment phase is progress toward being HELOC-free.