What is a redraw facility and how does it work?
A redraw facility is a feature available on some home loan products which allows you to access extra repayments you’ve made on your home loan.
Sometimes life can be unpredictable; an unplanned incident, your car breaks down or an unexpected bill. This is where a redraw facility can be helpful.
If you’ve been paying extra into your home loan, a redraw facility lets you withdraw those extra repayments to use as you need.
For example if you pay an extra $200 per month to your mortgage on top of your required repayments, after 12 months you would have $2,400 available redraw. This $2,400 is available for you to redraw at a later date.
Some lenders may charge a fee to have a redraw facility and/or a fee per redraw, while others change nothing.
How do you redraw money?
Most lenders allow you to check your available redraw balance in your online banking under your loan account.
To redraw money from your loan is usually easy with most lenders allowing you to request a redraw through online banking.
Each lender may have different options; however most will let you process a redraw via online banking, over the phone, or by visiting a branch.
In most cases the amount you choose to redraw will be available in your nominated bank account immediately or within 3 business days.
How many redraws can I make?
Some redraw facilities limit the number of redraws the borrower can make within a set period, usually a year. Once this number is exceeded the borrower cannot access additional repayments they have made.
Are there minimum or maximum redraw amount?
Redraw facilities often have a minimum amount which can be withdrawn, however with some loans there is no minimum.
The maximum redraw amount is the largest amount you can withdraw at any one time. In most cases this is equal to the total of additional repayments you have made. So if you are $3,000 ahead of your minimum loan repayment you can redraw $3,000.