Draw Period
Definition
The draw period is the opening stage of a home equity line of credit, when you can borrow from the line as needed. It commonly runs about ten years, after which the repayment period begins.
During the draw period many lines ask only for interest on what has been drawn, which keeps the monthly amount low.
The step up arrives at the end of it. Once repayment begins, the outstanding balance amortizes over the remaining years, and the payment can rise substantially even if nothing further is borrowed.
Some lines allow principal to be repaid during the draw period, which reduces both the balance and the size of that later step.