Repaying Your HELOC: Strategies to Manage Your Debt Effectively

A Home Equity Line of Credit (HELOC) can be a smart way to finance major projects or cover big expenses, but what happens when it’s time to pay it back? Understanding your repayment structure, and planning ahead, can help you manage debt effectively and avoid surprises.

Let’s break down how HELOC repayment works, what the terms mean, and key strategies to stay in control.

How Does HELOC Repayment Work?

A HELOC works differently from a traditional loan because it’s a revolving line of credit. You can borrow as needed, up to your approved limit, during what’s called the draw period. After that, the repayment period begins.

Here’s what a typical structure could look like:

• Draw Period: Usually lasts 5–10 years. During this time, you can borrow against your home’s equity, and most lenders require interest-only payments on what you’ve drawn—not on your full credit line.
• Repayment Period: Starts once the draw period ends. At this point, you can no longer borrow, and you begin making principal + interest payments. Repayment periods usually last 10–20 years, depending on your terms.

Do you pay interest if you don’t use the HELOC? No. Interest is charged only on the amount you borrow, not on the entire credit limit.

Important Terms to Know About Your HELOC

Before you dive into a HELOC, it’s essential to understand the key terms that are commonly used throughout the process and that shape how your it works. Here’s a quick breakdown of the most important terms to know.

HELOC Amortization Schedule: This shows how your payments will be structured during repayment, often starting higher than during the draw period because you’re now paying down principal as well as interest.

Variable vs. Fixed-Rates: Many HELOCs have variable rates, meaning your interest rate can fluctuate over time. Some lenders, such as WesBanco, offer fixed-rate conversion options, giving you predictable monthly payments.

Prepayment: You can usually pay off your HELOC early without a penalty, but you should confirm this with your lender first. Paying extra toward principal during the draw period can significantly reduce what you owe later.

Smart Strategies for Managing HELOC Repayment

1. Plan Before the Draw Period Ends

It’s easy to forget that interest-only payments are temporary. Use this time to budget for what your full repayment will look like.

2. Pay More Than the Minimum

Even during the draw period, consider paying down principal, not just interest. This lowers your future balance and total interest costs.

3. Create a Cash Flow Forecast

Factor in HELOC payments alongside other obligations to avoid strain on your monthly budget.

4. Explore Fixed-Rate Options

If variable rates make you nervous, see if you can lock in a fixed-rate with WesBanco to stabilize your monthly payments.

5. Automate Your Payments

Using WesBanco’s online and mobile banking tools, you can set up automatic payments to avoid missed due dates and late fees.

Why Choose WesBanco for Your HELOC?

WesBanco offers:

• Competitive HELOC rates and flexible terms
• Fixed-rate conversion options for predictable payments
• Mobile app tools to manage your balance, schedule payments, and monitor credit
• Access to your line of credit via Online and Mobile Banking by transferring funds to your checking account

Whether you’re renovating, buying a new home, or covering other big expenses, WesBanco also provides expert guidance and products designed for your needs.

Ready to start managing your HELOC the smart way? Learn more about WesBanco’s HELOC options here.

Content is for informational purposes only and is not intended to provide legal or financial advice. The views and opinions expressed do not necessarily represent the views and opinions of WesBanco.

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