A redraw facility is a product feature which generally allows you to access some or all of the additional repayments that you've made on your home loan over and above the minimum required repayments.
Redraw is a product feature enabled on most home loan products except for:
- accounts during a fixed rate period. Any extra payments you’ve made whilst your interest rate is fixed are only available at the end of your fixed rate period
- SMSF home loans.
Your redraw balance may change over time depending on several factors, including:
- loan limit changes
- repayment amount changes
- missed or late repayments and fees.
The below is an example explaining how redraw works where an extra payment has been made and the repayment amount has not changed on the home loan.
Sarah has a $300,000 home loan with Principal and Interest repayments and a 30-year term. 10 years into her loan she makes an extra payment of $50,000. Her repayment amount does not change and the extra payment she’s made means she is paying less interest on her home loan. This could result in Sarah paying off her home loan sooner. Because Sarah has continued to pay her contractual repayments on time, she can access her redraw balance. If she continues to keep her home loan account open after it has a balance of zero, then available redraw will start reducing to ensure her home loan limit and balance is $0 at the end of her loan term.