A family line of credit works differently from a standard loan. Instead of handing over the full amount on day one, the lender commits a maximum — a credit limit — and the borrower withdraws it in stages, called draws. Each draw starts accruing interest from its own date, so you only ever pay for the money that has actually been taken.
This guide explains how to set one up in Family Loan Tracker and how the interest is worked out.
Draws vs. repayments: the one distinction to keep straight
These two are easy to confuse, so keep it simple:
- A draw (or withdrawal) is money moving from the lender to the borrower. It increases the outstanding balance, because more of the credit line has been used.
- A payment is money moving the other way, from the borrower back to the lender. It decreases the balance.
A draw takes money out of the line; a payment pays it back. Everything else follows from that.
When a line of credit makes sense
A single lump-sum loan is fine when the borrower needs all the money at once. A line of credit fits when the money is taken in stages over time, for example:
- A home renovation paid out as the work progresses.
- Tuition or living costs released each semester.
- A runway for a small business drawn down as it is needed.
Because interest only accrues on what has been drawn, the borrower is not charged for money that is still sitting unused in the commitment.
Setting it up
- Log in and click Create loan.
- Set the loan amount to your credit limit — the maximum you are committing to the line (for example, $350,000).
- Turn on "Line of credit (multiple draws)."
- Add each draw: an amount and a date. Add as many as you need.
- Set your first payment date as usual.
The toggle is available to logged-in users on the full loan form (and in the Loan Agreement Generator), not on the quick start form.
How the interest is calculated
Each draw compounds daily from its own date. Interest is charged only on the amount actually drawn, never on the full credit limit. If a draw is dated in the future, it simply adds nothing to the balance until that date arrives.
On the loan page you will see a Line of Credit Draws card showing every draw, your total drawn, and your remaining available credit (credit limit minus what has been drawn).
A worked example
Say the credit limit is $350,000 at 4% and the borrower draws:
- $200,000 in October 2026
- $100,000 in March 2027
- $50,000 in January 2028
Each tranche begins accruing 4% daily compound interest from its own date. By the first payment date, the accrued interest across all three draws is capitalised into the balance, and the repayment schedule is built from that combined amount. The full $350,000 was committed, but interest only ever ran on the money that had actually been taken.
Current limitations
This first version covers the most common case:
- All draws must be dated before the first payment date. Draws that land after repayments have started (a true revolving line) are on the roadmap.
- Draws are set when you create the loan. The ability to add further draws to an existing line of credit afterwards is coming soon.
If your draw schedule is already known, enter every draw up front when you create the loan and you are set.
