Drawdown Loan

What is a Drawdown Loan?

A Drawdown Loan (sometimes known as a Drawdown Facility) is a loan which enables you to take out Further Advances with very little formality.

Put simply, a Drawdown Loan allows you to borrow 'in chunks' and repay the full amount borrowed, rather than taking out a loan for a larger amount that you do might not need and paying more in interest than is necessary, or taking out an amount too small that doesn't quite cover the amount needed.

They are a common option with flexible mortgages, allowing you to `draw` funds out of your mortgage account at any time during the mortgage term, providing you don`t increase the size of your borrowing over the previous mortgage advance. This is an option that can also be applied to self-build mortgages.

As a borrower it means you have access to borrowings in the future without having to resort to a remortgage or filling out reams of paperwork. You have the reassurance that you have the facility to access more money in the future if you need it, perhaps for home improvements. The downside is that any money borrowed is secured against your home, as with the rest of the mortgage.

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