Calculate monthly payments on a line of credit with interest-only or amortizing repayment. Model variable draws and balances for HELOC, business LOC, or personal lines.
A line of credit (LOC) works differently from a traditional loan — you draw funds as needed up to a limit and only pay interest on what you have borrowed. Repayment can be interest-only during the draw period or fully amortizing. HELOCs, business lines of credit, and personal credit lines all follow this revolving structure.
The Line of Credit Payment Calculator helps you model both interest-only payments during your draw period and fully amortizing payments during the repayment period. Enter your drawn balance, interest rate, and terms to see monthly costs for each phase.
Understanding the transition from interest-only draw period to full repayment period is critical — monthly payments can jump significantly, a phenomenon known as "payment shock" that catches many HELOC borrowers off guard. Planning for this transition well in advance, ideally before the draw period ends, lets you adjust your budget or refinance before the higher payments begin.
Lines of credit are flexible but their variable payments make budgeting difficult. During the draw period you may only pay interest, but once that period ends, you must repay principal too — often over a shorter window. This calculator reveals both the interest-only cost and the amortized repayment amount, so you can plan ahead and avoid payment shock.
Interest-only payment = Balance × (Rate / 12). Amortized payment = Balance × r(1+r)^n / ((1+r)^n − 1) where r = monthly rate and n = repayment period months. Total interest = (IO payment × draw months) + (amortized payment × repay months − balance).
Result: $425/mo interest-only → $520.54/mo amortized
With $60,000 drawn at 8.5%, interest-only payments during the 10-year draw period are $425/month. When the repayment period begins, the fully amortized payment over 20 years is $520.54/month. Total interest over the life of the LOC is $175,930. The payment increase from draw to repayment period is $95.54/month (22.5% jump).
A typical HELOC has two distinct phases. During the draw period (5-10 years), you can borrow and repay flexibly with interest-only minimum payments. During the repayment period (10-20 years), no new draws are allowed and you repay the balance with amortizing payments. The transition can increase payments by 50-100%.
The number one risk with lines of credit is payment shock when the draw period ends. On a $80,000 HELOC at 8%, interest-only payments are $533/month. When repayment begins over 15 years, the payment jumps to $764/month — a 43% increase. Making voluntary principal payments during the draw period reduces this shock.
Most LOCs have variable rates that adjust monthly or quarterly with the prime rate. A 2% rate increase on a $60,000 balance adds $100/month to interest-only payments. Budget for the worst case — take your current rate, add 2-3%, and verify you can still afford the payments.
If you have a large outstanding balance and want predictable payments, consider refinancing your LOC into a fixed-rate loan. This eliminates variable rate risk and payment uncertainty, though you lose the flexibility to re-draw funds.
The draw period is the time during which you can borrow from your line of credit and typically only need to make interest-only payments. For HELOCs, this is usually 5-10 years. During this period, you can draw, repay, and re-draw funds up to your credit limit.
When the draw period ends, you can no longer borrow additional funds and must begin repaying the outstanding balance with fully amortizing payments (principal + interest). This transition often causes significant payment increases — sometimes doubling the monthly payment.
Interest-only payments are lower but build no equity. Amortizing payments are higher but reduce your balance over time. If you can afford it, making amortizing payments during the draw period saves significant interest and avoids payment shock later.
Most lines of credit have variable rates tied to the prime rate. If rates rise 2%, your interest-only payment on a $60,000 balance increases by $100/month. Always stress-test your budget against 2-3% rate increases.
Yes. Most lines of credit have no prepayment penalties. Making extra payments during the draw period reduces your balance and saves interest. Some HELOCs may have early closure fees if you close the account within the first few years.
A loan provides a lump sum with fixed payments. A line of credit gives you a borrowing limit that you can draw from as needed, with payments based on your current balance. LOCs offer flexibility but often have variable rates and less predictable payments.