Calculate Total HELOC Interest
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Why Total Interest Matters More Than Monthly Payment
Most borrowers focus on the monthly payment when evaluating a HELOC — but the total interest cost tells a more important story. A $60,000 HELOC at 9.00% over a 10-year draw period followed by a 20-year repayment will cost far more in interest than the same balance paid off aggressively in 5 years. This calculator shows you the full picture.
The Draw Period Interest Trap
During the draw period, your minimum payment is interest-only — which keeps monthly costs low but means you're making zero progress on principal. If you draw $60,000 and only pay interest for 10 years at 9%, you've paid about $54,000 in interest and still owe the original $60,000 when repayment starts. Knowing this number up front is the single most important factor in deciding how aggressively to pay down your HELOC balance. See our HELOC payoff calculator for scenarios where you pay extra during the draw period.
Interest-Only vs. Amortizing: The Difference
Use the toggle above to compare two strategies. Under interest-only mode, you pay only interest during the draw period — lower payments now, but your full principal enters repayment. Under amortizing mode, you pay P&I from day one — higher payments, but significantly less total interest because you're reducing the balance throughout. The chart shows cumulative interest paid under both scenarios.
How Rate Changes Affect Total Cost
Because HELOC rates are variable, a 1-point rate increase on a $60,000 balance adds roughly $600 per year in interest. Over a 10-year draw period, a rate increase from 9% to 11% adds approximately $12,000 in total interest. Our HELOC rate calculator helps you model exactly what a rate change means for your specific balance.
Frequently Asked Questions
How is HELOC interest calculated?
HELOC interest is calculated on the outstanding daily balance using a simple daily periodic rate: (Annual Rate ÷ 365) × Daily Balance. Each month, these daily interest charges are totaled. During the draw period, most lenders require you to pay only this interest charge as your minimum payment. No interest accrues on the portion of your credit line you haven't drawn. Use our HELOC calculator to see both monthly and total interest under your specific scenario.
What is the total cost of a HELOC compared to a cash-out refinance?
For homeowners with existing mortgage rates below 5%, a HELOC is almost always cheaper in total cost — even at a higher rate — because a cash-out refinance replaces your entire first mortgage at today's rates. Refinancing a $300,000 mortgage from 3.5% to 7.5% to pull $60,000 in cash costs roughly $80,000+ more in interest over 30 years than keeping the existing mortgage and taking a HELOC for the $60,000 alone. See our HELOC vs home equity loan comparison for more context.
Can I deduct HELOC interest on my taxes?
HELOC interest is deductible only when funds are used to buy, build, or substantially improve the home securing the loan — per IRS guidelines under the Tax Cuts and Jobs Act of 2017. Using a HELOC for debt consolidation, vacations, or other personal expenses does not qualify for the deduction. The deduction applies to combined mortgage debt up to $750,000. Consult a tax professional before claiming this deduction.
How does the interest-only period affect total repayment cost?
Interest-only payments during the draw period significantly increase total cost. A borrower who draws $80,000 and makes interest-only payments for 10 years at 9% pays approximately $72,000 in interest during the draw period alone — before repayment begins. Then they still owe the full $80,000 principal. Making even modest principal payments during the draw period can cut total interest cost dramatically. Our payoff calculator shows the impact of paying $200–$500 extra per month during the draw period.