What does Draw Down Facility mean?

A draw down facility or the option of borrowing money from your mortgage is a benefit offered by a flexible mortgage type. Another important aspect of a flexible mortgage is that it allows you to make overpayments, and this is especially beneficial if you do not have a stable income.

Thus sometimes you can only afford to pay the required monthly installment, but sometimes you can make additional payments because you wish to finish off earlier in time and there will be no ‘early redemption fees’.

And here is where the draw down facility kicks in: you can actually borrow back money from these ‘excess’ payments, but you should make use of this option only when truly needed (for example, urgent home repairs). Also, when you keep overpaying for a period, depending on the lender, you will be allowed to pay less then your required payment at times you cannot afford more, naturally always keeping the balance. Anyhow, you should always carefully read what is stated in the fine print, as terms and conditions differ drastically from lender to lender.