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What a HELOC actually costs
Interest-only payments feel cheap. That is the design.
Rateshop Team · Jul 23, 2026 · 4 min read
A home equity line of credit charges prime plus a spread, usually between half a point and one and a half points, and the minimum payment is interest only.
The trap in the minimum payment
Paying only the interest on $100,000 at 6% costs $500 a month and never reduces the balance. Ten years on you still owe $100,000, having paid $60,000 in interest.
Using one well
A HELOC is excellent for short-horizon, self-liquidating borrowing: a renovation you refinance out of, a bridge between closings, a business cash-flow gap. It is a poor place to park long-term debt. If the balance is not going down, convert it into an amortizing mortgage portion.