What is a Personal Line of Credit Draw Period?

First Republic Bank
April 27, 2021

It’s not always easy to decide which financial priority should take center stage. When it comes down to it, a Personal Line of Credit from First Republic Bank can help you manage your existing debt or fund large purchases.

In this article, we will focus on what does the draw period with a First Republic Personal Line of Credit mean and how can it help you in creating a flexible debt repayment strategy.

What is a draw period?

First Republic’s Personal Line of Credit has two stages:

  • The draw period is a fixed amount of time (2 years) during which a borrower may “draw” upon available funds, up to a limit. Like a credit card, repaid funds are again available for withdrawal, during the draw period only.
  • The repayment period is the set time where loan payments shift from a non-amortizing payment to a fully amortizing payment. Additionally, funds are no longer available to “draw” once the repayment period has commenced.

What happens during the draw period?

Once approved for a First Republic Personal Line of Credit, borrowers enter the draw period, when they may withdraw funds from the available credit line. During the draw period, funds may be drawn all at once, or on an “as-needed” basis, similar to credit cards or a home equity line of credit.

During the two-year draw period, borrowers pay interest only on what they draw and are able to make principal payments at any time (with no fees). Principal amounts repaid during the two-year draw period are available to be borrowed again.

Once the draw period is complete, the Personal Line of Credit repayment period begins. During the repayment period, borrowers make principal and interest payments throughout the remainder of their loan term.

How does the draw period help with long term financial planning?

A key benefit of the draw period interest-only payment is flexibility. Borrowers can choose between multiple strategies to repay their debt — making aggressive payments or setting up a minimum monthly payment to manage their cash flow as needed. With no prepayment fees with First Republic’s Personal Line of Credit, borrowers can progress towards their long-term financial goals at their own desired pace.

That’s especially true if  they are expecting a series of significant expenses — like with minor home improvements or medical expenses. The main advantage of limiting the draw to an “as-needed” basis is that it can reduce the amount of interest due, while keeping the overall balance low.

Borrowers looking to benefit from an aggressive repayment strategy can do so with the comfort of knowing that they can always draw funds again as long as they are repaying principal and are within the draw period. On the other hand, interest-only payments are great for those looking to maximize their cash flow.

Please note that the Personal Line of Credit minimum is $60,000; maximum is the lesser of $350,000 or debt to be repaid at origination plus $100,000. Line of credit cannot be fully drawn at origination and borrowers must keep at least 10% undrawn at origination.

With fixed interest rates as low as 2.25% APR with discounts¹ and multiple repayment options (7 years, 10 years and 15 years each with a two-year draw period and a corresponding repayment period of 5 years, 8 years and 13 years respectively), First Republic’s Personal Line of Credit offers you the flexibility to customize your debt payoff strategy.

First Republic Personal Line of Credit Repayment Options

Loan Term

Repayment Period

7 years

5 years

10 years

8 years

15 years

13 years

If you’re interested in learning more about First Republic’s Personal Line of Credit, see your available fixed-rate options using this personal line of credit calculator and connect with a banker.

First Republic’s Personal Line of Credit – access funds with fixed rates from 2.25% APR (with discounts).

1. Annual Percentage Rate. Rates effective as of 06/15/2020 and are subject to change.

Borrower must open a First Republic ATM Rebate Checking account (“Account”). Terms and conditions apply to the Account. If the Account is closed, the rate will increase by 5.00%. Rates shown include relationship-based pricing adjustments of: 1) 2.00% for maintaining automatic payments and direct deposit with the Account, 2) 0.50% for depositing and maintaining a deposit balance of at least 10% of the approved loan amount into the Account, and 3) an additional 0.25% for depositing and maintaining a deposit balance of at least 20% of the approved loan amount into the Account.

Personal Line of Credit consists of a two-year, interest-only, revolving draw period followed by a fully amortizing repayment period of the remainder of the term. Draws are not permitted during the repayment period. Full terms of 7, 10 and 15 years available.

This product can only be used for personal, family or household purposes. It cannot be used for the following (among other prohibitions): to refinance or pay any First Republic loans or lines of credit, to purchase securities or investment products (including margin stock), for speculative purposes, for business or commercial uses, or for the direct payment of post-secondary educational expenses. This product cannot be used to pay off credit card debt at origination.

Personal Line of Credit minimum is $60,000; maximum is the lesser of $350,000 or debt to be repaid at origination plus $100,000. Line of credit cannot be fully drawn at origination.

The terms of this product may differ from terms of your current loan(s) that are being paid off, including but not limited to student loans. By repaying such loans, you may permanently be giving up tax and repayment benefits, including forbearance, deferment and forgiveness, and you may not be able to re-obtain such benefits if this loan is refinanced with another lender in the future.

Contact your legal, tax and financial advisors for advice on deciding whether this is the right product for you. Terms and conditions apply.

Product is not available in all markets. For a complete list of locations, visit firstrepublic.com/locations. Applicants must meet a First Republic banker to open account. This is not a commitment to lend; all lending is subject to First Republic’s underwriting standards. Applicants should discuss line of credit terms, conditions and account details with their banker.

The strategies mentioned in this article may have tax and legal consequences; therefore, you should consult your own attorneys and/or tax advisors to understand the tax and legal consequences of any strategies mentioned in this document.

This information is governed by our Terms and Conditions of use.