Here’s how the Interest-Only HELOC works:

1. Flexible borrowing: A HELOC is a credit line, allowing you to borrow as much as you need, up to your credit limit, during the draw period.
2. Interest-only payments: During the draw period, you have the option to make interest-only payments, which can significantly reduce your monthly payment amount. This feature gives you financial flexibility, especially during times when you may need extra cash flow.
3. Draw period: The period of time when you can access your funds and make interest-only payments. You can repay and reborrow multiple times during this period, similar to a credit card.
4. Repayment period: After the draw period ends, the HELOC enters the repayment period where you’ll make payments on both the principal and interest. Your payment amount will increase during this time to cover the principal repayment.