HELOC Payments

Are you concerned about making your Home Equity Line of Credit (HELOC) payments? You are not alone. As interest rates continue to fluctuate, the impact on homeowners can be profound, particularly for those with variable rate HELOCs. Many borrowers are facing mounting monthly payments, exacerbating financial stress and thwarting long-term wealth creation goals.

Let’s look at an example:

Consider a borrower who obtained a $200,000 HELOC at an initial interest rate of 4% a few years ago when the prime rate was 3.25%. Initially, their monthly payments were manageable, allowing them to access funds as needed. However, as interest rates rose at an alarming pace, the prime rate was brought to the current level of 8.5%. Consequently, the same borrower is now making larger monthly payments. Moreover, if the HELOC balance grew as interest was added to the amount drawn, a feature known as negative amortization, the monthly payments could be even larger. To provide further context to the following example, consider that the current average HELOC rate as of 1/17/2024 was 9.31%1.

The Consequences of Rising Rates:

Let’s calculate the monthly payments for the borrower:

  • At a 4% interest rate, the payment on a $200,000 HELOC = $2,024.90
  • At a 9% interest rate, the payment on a $200,000 HELOC = $2,533.52
  • Increase in monthly payment = $508.62
  • Over 5 years: their cost of financing has increased by a total of $30,517.20!
    • $508.62 increase in payment * 12 months per year * 5 years of payments = $30,517.20

A Practical Solution:

EquityChoice Shared Appreciation Mortgage is an innovative new product designed to alleviate the burden of rising interest rates on homeowners. Unlike traditional mortgages or HELOCs, EquityChoice offers a below market fixed rate of (4.5%/4.839% APR)2, with a shared appreciation feature, providing stability and predictability to borrowers throughout the life of the loan. What’s more, this proprietary mortgage product requires no monthly mortgage payments, providing immediate relief from ongoing financial obligations.

Benefits of EquityChoice:

  1. No Monthly Payments: EquityChoice eliminates the need for interim payments, providing borrowers with financial flexibility and peace of mind.
  2. 2. Prepayment Optionality: EquityChoice allows borrowers to freely prepay the mortgage at any time, offering the flexibility to manage their finances according to their needs.
  3. Fixed Rate Currently At 4.5%/4.839% APR2: EquityChoice maintains a below market fixed rate, with a shared appreciation feature, regardless of the interest rate shifts in the market. See terms and conditions that apply to any Shared Appreciation amounts you may owe on a Newfi EquityChoice Loan at Newfi.com/Equitychoice.

In an environment of rising interest rates, it is prudent to understand your financing options. If you want to see if EquityChoice might be a good fit for you and your current situation, call us at (877) 676-3934.  We have licensed loan advisors that can help you gain control of your financial future.

(Note: This blog post is for informational purposes only and does not constitute financial advice. Borrowers should conduct thorough research and consult with financial professionals before making any financial decisions.)


  1. Source: Bankrate / WSJ
  2. See terms and conditions that apply to any Shared Appreciation amounts you may owe on a Newfi EquityChoice Loan at Newfi.com/Equitychoice.

See if you qualify for EquityChoice!