You’ve probably heard the term redraw facility if you’ve been exploring home loan options, but what does it actually mean? We’re here to break down the bank jargon to help you make the right decision for you.
Available with most home loans, redraw allows you to withdraw from any additional repayments (over and above the minimum required) you make. This means you can make extra repayments to reduce the interest payable on the loan, whilst allowing future access to these funds if the need arises.
Note: some banks will charge for redraw so it’s important to check fees and charges and aim for a redraw facility that won’t cost you.
If you’re thinking about having a redraw facility attached to your home loan, it’s worth considering the below.
Withdrawing the funds will mean it will take you longer to pay off your loan.
Withdrawing your funds may cause your repayment amount to increase.
Some loans don’t have redraw options. Consider this if switching home loans.