When your Home Equity Line of Credit (HELOC) draw period ends, your repayment period begins—and a little preparation can make a big difference! Getting ready now can help you stay confident, avoid surprises, and keep your credit in great shape.
What Is a HELOC?
A HELOC lets you borrow from your home’s equity whenever you need it—for home upgrades, large expenses, or emergencies.
How Does a HELOC Work?
Every HELOC has two phases:
Draw Period
During this phase, you can borrow what you need, when you need it—up to your credit limit—and pay interest only on the amount you use. If you repay some or all of the principal, you can borrow it again—much like a credit card. When this period ends, you will no longer be able to borrow additional funds.
Repayment Period
During this phase, your HELOC payments include both principal and interest, and they may be higher than before. Keep in mind that most HELOCs have variable interest rates, which means your payment can change over time depending on market conditions.
Start Strong: Your Early HELOC Payoff Plan
If you are still in the early draw period, you can prepare for your HELOC payoff with small, proactive actions:
- Borrow smart: Only use what you can comfortably repay.
- Pay as you go: Make small principal payments during the draw period to reduce the balance that accrues interest later, lowering your future payments.
- Think ahead: Adjust your budget now so you’re ready when the repayment period begins. Use Coast Central’s HELOC payoff calculator to help you plan.
- Automate for peace of mind: Set up automatic payments or alerts to stay on track and avoid missed due dates.
Behind on HELOC Payoff Planning? Here’s How to Catch Up
If your draw period is ending soon and you haven’t mapped out a HELOC payoff plan yet, start with these steps:
- Know your numbers: Check your balance and estimate your upcoming payments once principal repayment begins. Coast Central’s HELOC repayment calculator can help you crunch the numbers.
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- Review your budget: Adjust your spending now to prepare for your future payments.
- Get ahead: If possible, make extra payments during the remaining draw period to reduce your balance and lighten your future payments. Even small steps now can make a big difference later during your HELOC payoff.
- Explore your options: Talk with a Coast Central Mortgage Loan team member about your HELOC repayment options. Refinancing your HELOC or switching to a fixed-rate loan may be possible for some members.
Coast Central Is On Your Team
The key is to be proactive—whether that means planning ahead or acting now. Understanding what to do when your HELOC draw period ends and exploring your repayment options enables you to move forward with your financial goals.
For our Coast Central members across Humboldt, Del Norte, and Trinity counties, we understand that life—and finances—can take unexpected turns. We’re here to help you stay prepared and confident. Contact our Mortgage Loan team today!
Coast Central – where YOU are central.