HELOCs don't automatically close after 5 years, but your lender may stop letting you borrow

A HELOC has two separate periods: a draw period when you can borrow money, and a repayment period when you pay it back. The draw period is typically 5 to 10 years, depending on your lender and your agreement. After the draw period ends — which might be at the 5-year mark for some HELOCs — your account doesn't close. Instead, you lose the ability to draw new money and enter the repayment period.

What actually happens depends on the terms in your promissory note and the specific lender. Some HELOCs have a 5-year draw period, others 7 years, and some 10 years. You need to check your loan documents to know when your draw period ends. The date is usually listed in the initial disclosure or the note you signed when you opened the account.

Key Takeaways

  • A HELOC's draw period typically lasts 5 to 10 years; after it ends, you cannot borrow more money, but the account remains open.
  • Once the draw period closes, you enter the repayment period, which usually lasts 10 to 20 years, and you pay interest only on what you already borrowed.
  • Your lender's terms determine the exact length of both periods, so you must review your promissory note or contact your lender to find out when your draw period ends.
  • Some lenders offer renewal options or extensions at the end of the draw period, though approval is not may provide and terms may change.

What the draw period and repayment period mean

During the draw period, you can borrow money from your HELOC as many times as you want, up to your credit limit. You typically pay interest only on the amount you've actually borrowed, not on the full credit limit. Many borrowers make interest-only payments during this phase, though some pay principal too.

When the draw period ends, you enter the repayment period. At this point, you can no longer borrow new money. You must repay what you already owe, usually over 10 to 20 years. Your monthly payment now includes both principal and interest, so it's usually higher than it was during the draw period. The account stays open the entire time — it doesn't close — but it functions like a regular loan rather than a line of credit.

How to find out when your draw period ends

Your draw period end date is in your original loan documents. Look for the promissory note or the initial disclosure statement you received when you opened the HELOC. These documents list the draw period length (for example, "5 years" or "7 years") and sometimes the exact end date.

If you can't find your paperwork, contact your lender directly. Call the customer service number on your HELOC statement or log into your online account. Ask them to tell you the end date of your draw period. They can also explain what happens next and whether you have any options to extend or renew.

What happens when the draw period ends

On the day your draw period ends, you lose access to new borrowing. If you try to draw money, your request will be denied. Your account doesn't close — you still owe whatever balance remains, and you still receive statements — but the credit line is frozen.

Your lender will send you a notice before the draw period ends, usually 30 to 60 days in advance. This notice explains the new repayment terms, including your new monthly payment amount. The payment will be higher than before because you're now paying both principal and interest instead of interest only.

Renewal and extension options

Some lenders offer the option to renew or extend your HELOC when the draw period ends. This means you could get another draw period — say, another 5 or 7 years — instead of moving straight to repayment. However, renewal is not automatic and is not may provide. Your lender will review your credit, income, and home value again, just as they did when you first opened the account.

If your credit has declined or your home's value has dropped significantly, your lender may deny renewal or offer less favorable terms. If renewal is available and you're interested, your lender will contact you before the draw period ends. You'll need to complete a new process and go through underwriting again.

What you owe during the repayment period

During repayment, you owe only the balance you actually borrowed, not the full credit limit. For example, if your HELOC had a $100,000 limit but you only borrowed $30,000, you repay only the $30,000 plus interest.

Your interest rate during repayment depends on your loan terms. Some HELOCs have a fixed rate that was set when you opened the account. Others have a variable rate that changes with the market. Check your promissory note to see which applies to you. Variable-rate HELOCs can have higher payments if interest rates rise during the repayment period.

Planning ahead for the transition

If your draw period is ending soon, start planning now. Calculate what your new monthly payment will be during repayment — your lender can provide this estimate. Make sure it fits your budget, because it will be significantly higher than your current payment.

If you think you'll need to borrow more money in the future, ask your lender about renewal options well before the draw period ends. If renewal isn't available or you don't may have access to, you may need to explore other borrowing options, such as a new HELOC, a home equity loan, or a cash-out refinance.

Frequently Asked Questions

Can I reopen my HELOC after the draw period ends?

No, you cannot reopen a closed draw period. However, you may be able to renew for another draw period if your lender offers it and you meet their requirements. If renewal isn't available, you would need to open a new HELOC with a different lender or the same lender, subject to a new process and approval process.

What if I can't afford the new payment when the draw period ends?

Contact your lender as soon as you know there's a problem. Some lenders offer options like extending the repayment period to lower the monthly payment, though this means paying more interest overall. Others may work with you on a temporary payment arrangement. Don't wait until you miss a payment to reach out.

Does my interest rate change when the draw period ends?

It depends on your loan terms. If you have a fixed-rate HELOC, your rate stays the same. If you have a variable-rate HELOC, your rate can change at any time based on market conditions, including during the repayment period. Check your promissory note to see which type you have.

Can I pay off my HELOC before the draw period ends?

Yes. You can pay off your HELOC balance at any time without penalty (though check your documents to confirm there's no prepayment penalty, which is rare but possible). If you pay off the full balance before the draw period ends, you may still have access to the credit line for the remainder of the draw period, depending on your lender's terms.