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Understanding how HELOC interest is calculated is essential before submitting a heloc application. Unlike traditional loans, a home equity line of credit typically uses a variable rate tied to a benchmark index plus a margin, and interest is charged only on the amount drawn rather than the total approved limit. Reviewing how HELOC interest is calculated can help borrowers anticipate payment fluctuations. Many homeowners also use a HELOC calculator to estimate potential payments and compare options offered by different heloc lenders. Evaluating requirements and repayment structure helps borrowers work more confidently with a home equity lender.