A home equity line of credit (HELOC) differs from other home financings because of its two HELOC repayment periods. During the draw period, often lasting up to 10 years, you can access and repay the funds as much as you want. You’ll repay the balance during the 10- to 20-year repayment period.
The HELOC matures or resets as it transitions between these two periods. Depending on your HELOC’s structure, at the end of the draw period, you’ll repay the principal balance in full (called a balloon payment) or begin making principal and interest (P&I) payments for the remaining term.
You’ll often receive a HELOC reset or maturity notification from your lender at least six months before it’s scheduled to reset or mature. Lenders send these notifications early, so you have time to prepare for the next phase (e.g., get ready to make P&I payments, refinance the HELOC, or pay it off).
In this guide:
- What is a HELOC reset or maturity notification?
- When will I get a notification that my HELOC will reset or mature?
- What does a reset or maturity notification look like?
- Options after you receive a HELOC reset or maturity notification
- What if I didn’t get a notification about my HELOC reset or maturity?
What is a HELOC reset or maturity notification?
When your HELOC approaches its reset or maturity date, your lender will notify you in writing of what’s about to happen. Most lenders begin sending notifications six months before the reset or maturity date. The goal is to give you time to prepare for what’s next.
How you’ll receive the HELOC reset or maturity notification depends on your lender and your selected communication preferences. You may get it by mail, or—if you’ve selected paperless communication—you might receive an electronic notification from your lender.
You shouldn’t need to do anything with the HELOC reset or maturity notification except start thinking about what it means for your finances and future actions you might need to take. What you’ll need to do will depend on the phase your HELOC is in, and your circumstances, such as:
- Start making principal and interest payments. Once you’ve reached the end of the draw period on your HELOC, you may enter the repayment phase. You’ll need to begin making P&I payments, often amortized over 10 to 20 years. Ensure you have room in your budget before reaching this reset date.
- Make a balloon payment of the principal balance. Depending on how your HELOC is structured, you might need to repay the entire principal balance at the maturity date. If you don’t have enough cash to do this, you’ll need to find a way to get the funds or refinance the HELOC.
- Refinance the principal balance of your HELOC. If you can’t cover a balloon payment with cash or want better rates or terms, you may consider refinancing your HELOC. You might do this by getting a home equity loan or by combining your mortgage and HELOC.
- Extend your HELOC or get a new one. If you want to continue to use your HELOC as a line of credit and don’t have a significant principal balance, your lender may be willing to extend the draw period—or you can apply for a new HELOC.
It’s up to you to understand the terms of the financing you receive. When you get a HELOC, the terms are specified in the loan documents. Review them before you get the HELOC, and set reminders, so you’re prepared to act when it matures or resets.
When will I get a notification that my HELOC will reset or mature?
Most lenders send HELOC maturity or reset notifications as early as six months before it happens. In many cases, you’ll receive several notifications during this period.
Many lenders also include information about maturity and reset dates in the HELOC billing statements they send. By reviewing your billing statements, you can ensure there are no errors and keep track of these important dates.
What does a reset or maturity notification look like?
Your HELOC reset or maturity notification will vary depending on your lender. There’s no standard form. Expect the notification to include such information as:
- When it’s scheduled to mature or reset. The notice provides details about the specific date your HELOC will mature or reset.
- What will happen at the maturity or reset date. The letter explains what will happen on this date. For example, you may need to repay the entire principal balance (i.e., make a balloon payment). This might also be the date you need to start making P&I payments.
- How much you’ll owe at the maturity or reset date. If you’re still in the draw period, your lender might not specify the amount you’ll need to pay because you can still draw from the HELOC. However, it should include an estimate of the most you may need to pay—in full or in P&I payments.
- Whom to contact if you have questions or concerns. You may have questions about your upcoming HELOC maturity or reset. The letter should provide information about whom to contact with questions. It may also include information on resources you can use to get help (e.g., housing counselors).
Every lender’s process is different. To know what to expect at your HELOC’s reset or maturity date, reach out to your lender. It can provide details about what to expect and answer any questions about its process.
Options after you receive a HELOC reset or maturity notification
Your available options after receiving a HELOC reset notification vary based on the HELOC’s terms and your financial situation.
Your options may include:
- Making a balloon payment of the principal balance
- Starting P&I payments
- Refinancing your HELOC
- Extending the draw period
If you can’t afford to make a balloon payment or the new P&I payment, you might consider refinancing your HELOC. One option is to refinance your mortgage and HELOC into a new mortgage. Another potential option is to refinance your HELOC into a home equity loan.
In some cases, you might still want to be able to use your HELOC as a revolving line of credit. As long as you’ve been revolving your HELOC and aren’t carrying a large balance, your lender may be willing to extend the draw period on your HELOC. If not, you can apply for a new HELOC.
You might be in a situation where you can’t afford the payment because your financial situation changed, or you can’t refinance the HELOC because your home’s value deteriorated. If so, talk to your lender. Your lender may agree to modify your HELOC to help you avoid default and foreclosure.
What if I didn’t get a notification about my HELOC reset or maturity?
Lenders should send HELOC notifications at least six months before your reset or maturity date. However, the timing varies based on your lender’s policies and processes. It’s your responsibility to repay your HELOC even if you don’t get a notification.
Contact your lender if you think you should have gotten a statement about your HELOC reset or maturity. Your lender is also an excellent resource if you want to learn more about what you should expect at the maturity or reset date.
If you don’t repay your HELOC as agreed in your loan documents, you risk defaulting or losing your home to foreclosure. By reading your HELOC loan documents at origination and proactively contacting your lender with questions, you’ll be better equipped to manage your debt.