What is the monthly payment on a $50,000 HELOC?

The interest-only monthly payment on a fully drawn $50,000 Home Equity Line of Credit (HELOC) can range from $375 to $450. This assumes an interest rate between 9% and 10.8%. Obtaining the best rate depends on a range of factors such as line size, credit score, your debt-to-income, loan-to-value, and more. The interest rate is variable, and the monthly payments will change over the initial 10 year draw period depending on changes to the Prime Rate. Once the draw period ends, the HELOC will transition to the repayment period. At this point, your monthly payments will take into account both principal and interest.

Why using a HELOC is a good option in #Json=Label_Lookup|Brand=citizensbank|ApplyToParentElement=|TargetElementType=span|TargetElementId=dropdown|Key=Current Year#

HELOC's give you the ability to access the equity in your home to borrow at a low rate and use the funds for a wide range of purposes. A HELOC offers flexibility in terms of accessing your funds. You can borrow in small increments, a few large increments or whatever suits your needs, as long as you have the funds available. There's also the option to make interest-only payments during the draw period, this can set you up for more affordable monthly payments compared to high-interest credit cards or personal loans with shorter terms.

How does a HELOC work?

A HELOC works similarly to a credit card in that you are approved for a set amount of credit to use based on the equity in your home. But you do not have to use it all at one time as you would for a home equity loan. You can easily access HELOC funds through online banking or via a mobile banking app.*

The term of a HELOC is divided into two distinct phases:

The draw period

During the borrowing or draw period of the HELOC, credit is available for you to withdraw. This period typically runs for 10-15 years. You can take out either small amounts or a larger lump sum. It's up to you and your credit limit.

During this time, you're only required to make monthly interest payments on the money borrowed and not on the entire credit line. Of course, you can always pay more to reduce your balance faster.

The repayment period

After the draw period ends, the repayment period begins. The repayment period length may vary by lender and could last anywhere from 10 to 20 years. When you enter the repayment period, you're responsible for both interest and principal payments.

Most HELOC interest rates are variable and adjust with the prime rate. This means the amount of interest you pay could fluctuate up or down along with market interest rate trends throughout the draw and repayment period.