What happens when a HELOC draw period ends?
When the draw period ends, you can no longer borrow from the line, and the HELOC moves into its repayment period. Payments often rise because you start repaying principal as well as interest, and some plans require a balloon payment of the full balance. Your HELOC agreement sets the exact terms. Turn Times, a licensed mortgage broker (NMLS #2099552), helps California and Colorado homeowners compare options from participating wholesale lenders.
Key facts
- A HELOC is an open-end line of credit secured by your home. During the draw period you can borrow up to your credit limit. (CFPB: What is a HELOC?)
- After the draw period, you enter the repayment period and can't borrow more. The CFPB notes that monthly payments are often significantly higher once repayment begins.
- Some plans require you to repay the whole balance when the repayment period begins, which is called a balloon payment.
- Most HELOCs have a variable rate, so payments can change. Some plans let you convert part or all of the balance to a fixed rate.
- A lender may stop further draws or reduce your line in limited situations described in federal rules, such as a significant decline in home value. (Regulation Z §1026.40)
- Turn Times may charge an origination fee. All fees are disclosed on your Loan Estimate.
Draw period vs. repayment period
| | Draw period | Repayment period | |---|---|---| | Can you borrow more? | Yes, up to the credit limit | No | | What the payment covers | Depends on the plan; some allow interest-only minimum payments | Principal and interest, on the schedule in your agreement | | Payment size | Based on the balance and the plan's minimum | Often higher, because principal is now included | | Balloon payment? | No | Possible, if the plan requires it |
Your agreement and periodic statements show when your draw period ends and how repayment works. If anything is unclear, ask your HELOC servicer.
Why the payment can jump
Two things usually drive the change. First, principal repayment begins, so the payment now pays down the balance instead of only covering interest. Second, a variable rate may have moved since you opened the line. The CFPB HELOC brochure explains how minimum payments and rate changes work.
Options to compare before the switch
Start early, ideally well before the draw period ends.
- Follow the repayment schedule. Budget for the new payment using the figures your servicer provides.
- Pay down the balance during the draw period. A lower balance means a smaller repayment amount later.
- Use a fixed-rate conversion, if your plan offers one. This can make payments more predictable, though the fixed rate may be higher than the variable rate.
- Refinance into a new home equity option. Some homeowners compare a new HELOC, a home equity loan, or a cash-out refinance that pays off the existing line. Each new loan is a new application, with its own costs and underwriting.
If you refinance, plan for time to apply, appraise, and close. Timelines vary by lender, property, appraisal, and underwriting.
How much a new line or loan can be depends on your home's value, what you owe, and each lender's limits. See how much you can borrow with a HELOC. Self-employed homeowners can also compare bank statement HELOC options.
Related: Home equity options · Home equity options in California and Colorado · Home equity basics · Glossary · Licensing and disclosures
This is general education. Terms, available amounts, and eligibility are set by each lender.
Common questions
How do I know when my HELOC draw period ends?
Your HELOC agreement states the length of the draw period, and your periodic statements or your servicer can confirm the end date.
Can I still borrow from my HELOC during the repayment period?
No. Once the draw period ends, the line no longer allows new advances. You repay the outstanding balance on the schedule in your agreement.
Why did my HELOC payment go up?
The payment usually rises because principal repayment begins after the draw period. A variable rate that has increased can also raise the payment.
What is a balloon payment on a HELOC?
It is a requirement in some plans to repay the entire remaining balance at once when the repayment period begins, instead of over time.
Does Turn Times service my existing HELOC?
No. Turn Times is a licensed mortgage broker, not a lender or servicer. Contact your servicer about your current line. Turn Times can help you compare new options from participating lenders.
Next step
Is your draw period ending soon? Schedule a Loan Options Consultation at /schedule or call 844-999-8876 to compare how participating lenders would look at your California or Colorado home. A consultation is a no-obligation educational conversation, not a credit decision.
Sources
- CFPB: What is a home equity line of credit (HELOC)?
- CFPB: HELOC brochure
- CFPB: What is the difference between a home equity loan and a HELOC?
- CFPB: Regulation Z §1026.40, requirements for home equity plans
- CFPB: What is a second mortgage loan or "junior lien"?
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