During the draw period
The borrower may draw, repay and borrow again up to the available limit under the agreement. Interest and minimum-payment rules apply to the outstanding balance.
Some plans permit interest-only minimum payments during part of the draw period, but terms vary.
When repayment begins
Additional draws may stop and the remaining balance is repaid under the agreement. A payment can increase when principal repayment is added or the remaining term is shorter.
Review the scheduled transition before opening the line.
Variable rates can change
Many HELOCs use an index plus a margin, so the rate and payment can rise or fall. The agreement explains adjustment timing, caps and minimum-payment calculations.
A low opening payment should not be treated as the permanent payment.
Questions for the disclosure
Identify the draw and repayment lengths, rate index, margin, caps, minimum draw, payment formula, fees and any balloon feature.
Plan for the fully drawn balance and repayment phase—not only the amount expected to be used initially.