In short, in most cases at the end of a 30 year amortizing home equity line of credit (HELOC), your loan balance is paid off.
Most HELOCs are structured as 20 or 30 year loans with an initial 10 year draw period during which you can draw down and repay the line an unlimited number of times. The remainder of the loan term is the repayment period. For example, in the case of a 30 year HELOC with a 10 year draw period, after 10 years (and one month) you can no longer draw down the HELOC and you are required to pay off the outstanding loan balance over a 20 year repayment period.
While the interest rate for most HELOCs is adjustable during the draw period, your rate and monthly payment are usually fixed during the repayment period. Your payment is calculated based on your line balance at the end of the draw period and the interest rate according to your loan terms. So if your line balance after 10 years is $25,000, your HELOC effectively becomes a $25,000 20 year fixed rate loan.
Because you cannot draw down the line during the repayment period, you pay off your loan balance a little with every payment you make. At the end of year 30 of the HELOC, your loan balance is paid in full with your final monthly payment.
Review How a HELOC Works
The explanation above applies to amortizing HELOCs, which is the most common type of line. A relatively small number of HELOCs, however, have a balloon payment structure.
If your HELOC has a balloon payment you do not have a repayment period and instead you are 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 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.
If you do not have sufficient funds to make the payment, you may default on the loan. To reiterate, a 30 year HELOC with a balloon payment is highly unusual so this outcome is uncommon.
Most borrowers with balloon payment HELOCs pay down their loan balance at their discretion over time to reduce the the payment they are required to make at the end of loan. Alternatively, if you do not pay down your loan balance you may decide to refinance into a new HELOC or home equity loan before the balloon payment is due.
The table below shows HELOC and home equity loan interest rates, fees and program conditions for leading lenders near you. We recommend that you contact multiple lenders to find the best loan terms if you are refinancing a HELOC.
“My lender offered me a Home Equity Line of Credit (HELOC). What is a HELOC?” CFPB. Consumer Financial Protection Bureau, September 25 2017. Web.