What Is the Draw Period and Repayment Structure?

The Wealth Builder HELOC operates in two phases: a draw period followed by a repayment period. Understanding both is essential for planning how you will use and repay the line over time.

Draw Period — 10 Years

During the draw period, you have full access to the line of credit. You can draw funds, repay them, and draw again — just like a revolving credit line. Interest accrues daily on your outstanding balance, and your minimum payment is based on that interest. However, the power of the Wealth Builder HELOC comes from making more than the minimum — sweeping income against the balance to reduce it and lower the daily interest charge.

Repayment Period — 20 Years

After the 10-year draw period ends, the line closes to new draws and enters a 20-year repayment phase. During this period, your payment is calculated as a fully amortizing P&I payment on the outstanding balance at that time. The goal for most Wealth Builder HELOC borrowers is to have significantly reduced — or fully eliminated — the balance well before the repayment period begins.

Total Loan Term

The combined draw period (10 years) and repayment period (20 years) equals a 30-year total loan term. This is the same total duration as a conventional 30-year mortgage, but the structure is entirely different — and the potential for early payoff is far greater.

Early Payoff Potential

Because interest accrues daily on the outstanding balance, borrowers who consistently sweep surplus income against the line can pay it off in 10–15 years or less — without ever making a formal extra payment or refinancing.

Payment change at the end of the draw period (illustrative example, not a quote)

Use a hypothetical 7% rate and compare two balances at the moment the 20-year repayment period begins:

• Interest only, $400,000 balance: $400,000 × 7% ÷ 12 = about $2,333 a month during the draw period.
• Repayment of $400,000 over 20 years: about $3,101 a month, a step up of roughly $768.
• Repayment of a $250,000 balance over 20 years: about $1,938 a month, which is lower than the interest-only payment on $400,000.

The lesson is that every dollar of principal retired during the draw period lowers the repayment payment. The rate may also differ at that time, since it floats.

A planning checklist by stage

• Years 1–3: set your sweep habit and an emergency buffer so you do not need to redraw for routine expenses.
• Years 4–7: review your balance against your original payoff goal and the rate environment.
• Years 8–10: estimate the repayment payment on your current balance and decide whether to pay down further or plan a refinance.

If you sell or move

The line is repaid from sale proceeds at closing, like any mortgage, and there is no prepayment penalty to factor in.

Using the draw period well

Treat the line as two tools. One is a payoff tool, where surplus income reduces the balance. The other is a liquidity tool, where you keep room to draw for real needs. Borrowers who confuse the two sometimes redraw what they swept for non-essentials and arrive at year 10 with the same balance they started with. A simple rule, such as drawing only for planned categories, keeps the repayment-phase payment predictable.

Frequently asked questions

Can the draw period be extended?

Extensions are not something to count on. Terms vary by program and borrower profile; we confirm the current guidelines when we review your scenario.

Can I draw again during the repayment period?

No. Once the draw period ends, the line closes to new draws, and the balance is repaid on a fixed schedule.

What if I want to switch to fixed before year 10?

You can refinance into another loan if you qualify at that time. Compare closing costs and your remaining balance first.

Related guides

• How the rate is determined
• Qualifying payment for DTI
• Draw vs. repayment on a standard HELOC
• Refinance calculator

Quick recap

• A balance still outstanding at year 10 is paid back as principal and interest over 20 years, so the payment steps up.
• Reducing the balance before year 10 shrinks the repayment-phase payment.
• There is no prepayment penalty, so you can pay down at any time.