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.

Will a Drawdown Loan appear on my Credit Report?

Providing your lender shares the credit agreement with the Credit Reference Agencies, then you can expect your account to appear on your Credit Report, showing the current balance, account status and more. It is unlikely to specify that it’s a Drawdown Loan, however.

If you’re planning on applying for a Drawdown Loan, you can check your Credit Report beforehand to see the information that the lender will use to assess your application. Our Multi Agency Credit Report collates everything being reported by Equifax, Experian, TransUnion and Crediva, letting you easily see everything you need on one online report, with no gaps in the data.

If you haven’t already, you can try checkmyfile free for 30 days, then for just £14.99 per month. Cancel online at any time.

How does a Drawdown Loan work?

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 than you need, which could result in you 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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