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What happens at the end of a 30 year HELOC?

What happens at the end of a 30 year HELOC?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

In short, at the end of a 30 year amortized home equity line of credit (HELOC), your loan balance is paid off. Most HELOCs are structured as 20 or 30 year loans with a 10 year draw period. In the case of a 30 year HELOC with a 10 year draw period, after 10 years (and one month) the borrower can no longer draw down on the HELOC and is required to pay down the outstanding loan balance over a 20 year repayment period. At the end of year 30 of the HELOC, the loan balance is paid in full with your final monthly payment, unless the HELOC has a balloon payment structure which is relatively uncommon.

If your HELOC has a balloon payment structure you do not have a repayment period and instead the borrower is required to pay the outstanding loan balance in full with a single payment at the end of the loan term. For example, for a 30 year HELOC with a balloon payment and an ending loan balance of $45,000, the borrower is required to make a $45,000 lump sum payment at the end of year 30. Most borrowers with balloon payment HELOCs pay down the loan balance over time to reduce the size of the balloon payment that is due at the end of loan. Alternatively, if borrowers do not pay down their loan balance before the balloon payment is due they may decide to refinance into a new HELOC or home equity loan. To reiterate, a 30 year HELOC with a balloon payment is highly unusual so I do not think this applies to you.

We provide a comprehensive overview of How a Home Equity Line of Credit Works on FREEandCLEAR and you can review your HELOC note to determine how it is structured.

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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