It is a loan set up as a line of credit for some maximum draw, rather than for a fixed dollar amount taken as a one time lump sum. HELOCs have a draw period, during which the borrower can use the line, and a repayment period during which it must be repaid. Draw periods are usually 5 to 15 years, during which the borrower is only required to pay interest and my re-draw any amounts paid back. Repayment periods are usually 10 to 20 years, during which the borrower must make payments to principal equal to the balance at the end of the draw period divided by the number of months in the repayment period. The exact terms will vary depending on the lender.