GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Draw Period


Synonyms:accessible funds, extraction period, pull out, take out period
Filed Under: financial-banking, mortgages
Tags: banking, mortgage
 

Definition of draw period

draw period
1. On a line of credit, the draw period is the fixed time when a borrower can make withdrawals from the account. Once the draw period expires, borrowers may be able to renew the credit line or may be required to pay the outstanding balance in full, or over time.

Related Terms and Acronyms:

  • credit line   The maximum money amount available in an open-end credit arrangement such as a credit card or overdraft protection.
  • line of credit (LOC)   A commitment by a financial institution to lend up to a specified maximum amount to a customer during a specified period of time.
  • repayment period   In a home equity line of credit, that portion of the life of the loan that follows the draw period. During the repayment period, the borrower cannot take out any more money, but must pay down the loan.
  • standby commitment   A commitment from a lender to make a loan in a specified period of time on specified terms with the understanding that the borrower will not likely draw down the funds.

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