Draw Period vs. Repayment Period: Your HELOC Has Two Halves

A HELOC isn't one product, it's two products stapled together, and the switch between them catches people off guard roughly a decade after they stopped reading the paperwork.

The first half is the draw period, commonly around ten years. The line of credit is open, you can borrow and repay as you like, and the required minimum is often interest only. This is the half where paycheck parking lives. Deposits drop the balance, spending draws it back up, and the flexibility is the entire point.

Then the draw period ends and the repayment period begins, often running fifteen or twenty years. The line of credit closes to new borrowing and whatever balance remains converts to a regular amortizing loan. The payment jumps, sometimes sharply. You're suddenly paying principal plus interest on a schedule, instead of interest only at your own pace. The flexible tool you built a strategy around becomes an ordinary installment debt.

The interest-only minimum during the draw years makes a big balance feel cheap to carry. That comfort is exactly how people arrive at the repayment period still holding most of what they borrowed. If you're parking paychecks the way we teach it, your balance should trend down over the years instead of riding the ceiling. And never maxing your line of credit is what keeps the eventual switch a non-event instead of a crisis.

Plan for the transition on purpose, years early. You have three clean outs. Be done, meaning the target debt is gone and the LOC balance is at or near zero before the draw period closes. Replace, meaning you open a new line while your finances are strong and retire the old one, restarting the clock. Or refinance the remaining balance into a fixed loan you priced on purpose, rather than one you accepted by default. Any of the three works. Drifting into the switch with a fat balance is the one that hurts.

So find your dates. The draw period's end is printed in your agreement, and knowing it changes how you use the middle years. If you're newer here, how it works covers what the line of credit powers, and this piece is the fine print that keeps it safe.