Going through the same problem with my HELOC. My minimum payment has gone from $390 to $426 since the start of the year as the variable rate has moved from 4.5% to 6.5%. I called my credit union about it and was told it was a quarterly recalculation. The $426 payment is interest w/ principal on 46k. If it was 75k the payment would have moved from $636 to $695 in this time, a $60 dollar move.
I was worried about this too earlier in the year of what happens if my product has a runaway interest rate. With an economy fueled by debt it puts a ceiling on how high interest rates could go before it it cracks credit markets. Current 12 month libor rate is right at about 4% which is what the interest rate on my product is tied to has likely peaked. The fed funds discount rate is lagging what the interchange market has priced in and the rate on the 10 year treasury has dipped down to 2.78%. Global demand destruction for treasury bonds as emerging markets can't afford to issue debt in reserve curriencies places a lid on how high interest rates can go.
OP points to one of the drawbacks of taking out a larger HELOC balance is the payment begins to stack up. You can't really take 200k and use it effectively as a downpayment because that would be $1500 dollars a month in of itself plus the new mortgage and your existing mortgage. But if you take out just 50k for a DP and keep that payment under $500 that is just like making a car payment, relatively nothing to deal with. FWIW, 50k is 5% down on a 1 million dollar property enough to go conventional.
For my next LOC I'm looking at a business line of credit interest only for 5 years. Taking out only $25,000 at 7% that is only $145 a month to keep your cash flow rolling. The key in all of this again is to just take out the amount you need and nothing more to keep the monthly payment in check.
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