What is a redraw facility?

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9+

Excellent

These home loans offer low costs, coupled with a host of features, giving the best overall value.

7+

Great

These home loans may have slightly higher interest rates or fewer features but overall, a competitive offering.

5+

Standard

Usually the home loans would offer above average rates. They may still include some competitive features.

0+

Basic

Higher costs and/or fewer features.

Getting a home loan with a redraw facility makes the loan a lot more useful as a financial product. You can put extra money in there and pull it out to spend just like money in a bank account.

It's a great mortgage feature but access to redraw money can be limited and depends on your loan and the lender's rules. Redraw is different to an offset account and doesn't give you the same level of control over your cash.

Here's what you need to know about home loan redraw.

What is a home loan redraw?

Many home loans, especially variable rate home loans, let you make extra repayments on top of your required monthly repayment amount. If the home loan also has a redraw facility then the loan allows you to withdraw (or redraw) some of the extra repayments you've made and spend them as you need.

As long as you make extra repayments, you can use this money in your home loan like it's money in a savings account. Some lenders give you easy access to this money via a card or app, but there may be limits to how much you can access and there may be redraw fees.

A redraw facility makes your home loan a more flexible and useful product because you can save and spend with it. And any extra repayments on your loan also lower how much interest you pay.

Does every home loan have a redraw facility?

Not every home loan offers redraw, although it is a fairly common loan feature. Redraw is more common on variable home loans and less common on fixed rate loans. Not every loan allows you to make extra repayments in the first place, let alone redraw them.

Always check the details of a home loan online and read your loan contract carefully to make sure the loan has a redraw if you want one.

The benefits of home loan redraw

There are two major benefits to home loan redraw: paying less interest and having access to your cash.

Extra repayments means less interest

One is that any extra repayments you make on top of your monthly repayments lower the amount of interest you pay. This is because you're paying the loan off faster.

Let's say you have a $550,000 loan amount over 30 years and your interest rate is 2.00%. Your monthly principal and interest repayments would be $2,032 a month.

But if you paid an extra $100 a month from the start of the loan term you'd repay the loan in 28 years and one month rather than 30 years and you'd save $12,387 in interest.

Spend the money when you need it

Redraw allows you to make extra repayments and therefore pay less interest while also giving you the option to spend this money if you need it. Now of course, if you spend your extra repayments you lose the full benefit of paying less interest.

But even if you save up the extra repayments for a few years and then redraw some of it, you still pay a little less interest.

A redraw facility makes your home loan a more flexible mortgage product for saving and spending while enjoying the benefit of extra repayments.

But there are some downsides to a redraw facility.

Money in a redraw technically belongs to your lender

Another downside to home loan redraw is that extra repayments aren't your money. Once paid, the money belongs to your lender. A redraw facility means that your lender allows you to take the money back out.

This is a disadvantage because lenders have different rules about redraw. A lender may stipulate a minimum or maximum redraw amount per month. This gives you less control over the money. Lenders may also charge fees or require you to redraw online only (some lenders, especially online lenders, don't have bank branches).

And your lender can restrict your redraw access in any way they want. A few years ago the Commonwealth Bank made headlines when it announced that it was going to slowly reduce the amount of extra repayments a borrower can access over time to ensure that the loan is repaid. In effect, this meant that a borrower couldn't access 100% of their extra repayments.

ME Bank announced something similar but abandoned the plan due to customer outrage.

A redraw facility is not the same as an offset account

A 100% offset account is a similar mortgage feature to a redraw. You put money in the offset account and it reduces your interest charges exactly like extra repayments. And you can spend the money in your account any way you like. This is similar to redraw.

But an offset account is better than a redraw facility. The money in an offset account is your money. Your lender can't restrict your access to it and they can't gradually reduce the amount of it you can access (although the lender can charge a fee for the account). You enjoy all the protections and accessibility of a bank account.

Money in an offset account is usually guaranteed by the federal government's deposit guarantee in the event the lender goes bankrupt. But this is limited to $250,000 and it depends on your lender, so always check the fine print on your mortgage contract.

Learn more about redraw versus offsets

How do I access money from my redraw?

Every lender lets you access extra repayments differently. A lender may have a banking app, meaning you can easily spend the money or move it around.

Some lenders have an online banking platform but not an app, which functions in a similar way but is a bit less convenient. If you do all your banking with your lender then transferring money to or from your redraw should be quick. But if you bank with one institution and have your home loan with another then moving money between the two can take a day or two, maybe more.

Your lender may issue you with a bank card you can use to access money in your offset or redraw.

Do fixed rate home loans come with redraw?

Fixed rate loans are less likely to allow borrowers to make extra repayments and redraw them. But it is possible to find fixed rate loans that do. Many fixed rate loans may allow you to make extra repayments up to a certain limit, such as $10,000, during the fixed period of the loan. If the loan also has redraw you could therefore save and later redraw no more than $10,000.

If having the flexibility of extra repayments and a redraw facility is important to you, make sure you check the details of your loan carefully before applying. There are so many home loans to compare that it makes no sense to miss out on a feature you need.

Get a home loan with free redraw

The loans in the table below all offer redraw without a fee, but some may specifiy a minimum redraw amount.

1 - 7 of 7

Updated regularly

Name	Finder Score	Interest Rate p.a.	Comparison Rate p.a.	Fees	Monthly Payment
loans.com.au Variable Home Loan Principal & Interest10% min. depositOwner-occupierOffset account loans.com.au Variable Home Loan Principal & Interest10% min. depositOwner-occupierOffset account Details Fees Pros & cons Product Name loans.com.au Variable Home Loan Interest Rate Type variable rate Repayment Type Principal & Interest Interest Rate p.a. 6.04% Comp. Rate p.a. 6.08% Minimum Loan Amount $50,000 Maximum Loan Amount $2,000,000 Maximum Loan Term 30 years Maximum LVR 90% Loan Redraw Facility Yes Offset Account Yes Split Loan Facility Yes Fixed Interest Option Loan Portable Extra Repayments Yes Application Fee $0 Lender's Legal Fee $0 Valuation Fee $230 Ongoing Fees $0 p.a. Settlement Fee $300 Discharge Fee $300 Pros A competitive variable rate home loan Optional offset account No application fee You can apply online Cons Offset account comes with 0.10% rate	Finder score 9 Excellent	Interest Rate 6.04%	Comparison Rate 6.08%	Fees Application: $0 Ongoing: $0 p.a.	Monthly Payment $3,014	Continue Compare
Macquarie Bank Offset Home Loan Package Principal & Interest20% min. depositInvestmentOffset account Macquarie Bank Offset Home Loan Package Principal & Interest20% min. depositInvestmentOffset account Details Fees Pros & cons Product Name Macquarie Bank Offset Home Loan Package Interest Rate Type variable rate Repayment Type Principal & Interest Interest Rate p.a. 6.45% Comp. Rate p.a. 6.70% Minimum Loan Amount $150,000 Maximum Loan Amount $10,000,000 Maximum Loan Term 30 years Maximum LVR 80% Loan Redraw Facility Yes Offset Account Yes Split Loan Facility Yes Fixed Interest Option Yes Loan Portable Extra Repayments Yes Application Fee $0 Lender's Legal Fee $0 Valuation Fee $0 Ongoing Fees $248 p.a. Settlement Fee $350 Discharge Fee $400 Pros 100% offset account Interest only options Cons Annual fee of $248	Finder score 8.6 Great	Interest Rate 6.45%	Comparison Rate 6.70%	Fees Application: $0 Ongoing: $248 p.a.	Monthly Payment $3,147	Continue Compare
Unloan Variable Home Loan Principal & Interest20% min. depositInvestment Unloan Variable Home Loan Principal & Interest20% min. depositInvestment Go to site Details Fees Pros & cons Product Name Unloan Variable Home Loan Interest Rate Type variable rate Repayment Type Principal & Interest Interest Rate p.a. 6.29% Comp. Rate p.a. 6.20% Minimum Loan Amount $10,000 Maximum Loan Amount $10,000,000 Maximum Loan Term 30 years Maximum LVR 80% Loan Redraw Facility Yes Offset Account No Split Loan Facility No Fixed Interest Option No Loan Portable Extra Repayments Yes Application Fee $0 Lender's Legal Fee $0 Valuation Fee $0 Ongoing Fees $0 p.a. Settlement Fee $0 Discharge Fee $0 Pros A competitive variable rate home loan Automatic interest rate discount No lender fees Cons No offset account You can’t borrow more than 80% of the property value, even with a first home buyer scheme Unloan doesn’t offer fixed rates or interest only loans	Finder score 8.9 Great	Interest Rate 6.29%	Comparison Rate 6.20%	Fees Application: $0 Ongoing: $0 p.a.	Monthly Payment $3,095	Go to site Compare
Unloan Variable Home Loan Principal & Interest20% min. depositOwner-occupier Unloan Variable Home Loan Principal & Interest20% min. depositOwner-occupier Details Fees Pros & cons Product Name Unloan Variable Home Loan Interest Rate Type variable rate Repayment Type Principal & Interest Interest Rate p.a. 5.99% Comp. Rate p.a. 5.90% Minimum Loan Amount $10,000 Maximum Loan Amount $10,000,000 Maximum Loan Term 30 years Maximum LVR 80% Loan Redraw Facility Yes Offset Account No Split Loan Facility No Fixed Interest Option No Loan Portable Extra Repayments Yes Application Fee $0 Lender's Legal Fee $0 Valuation Fee $0 Ongoing Fees $0 p.a. Settlement Fee $0 Discharge Fee $0 Pros A competitive variable rate home loan Automatic interest rate discount No lender fees Cons No offset account You can’t borrow more than 80% of the property value, even with a first home buyer scheme Unloan doesn’t offer fixed rates or interest only loans	Finder score 9.1 Excellent	Interest Rate 5.99%	Comparison Rate 5.90%	Fees Application: $0 Ongoing: $0 p.a.	Monthly Payment $2,998	Continue Compare
Macquarie Bank Offset Home Loan Package Principal & Interest20% min. depositOwner-occupierOffset account Macquarie Bank Offset Home Loan Package Principal & Interest20% min. depositOwner-occupierOffset account Details Fees Pros & cons Product Name Macquarie Bank Offset Home Loan Package Interest Rate Type variable rate Repayment Type Principal & Interest Interest Rate p.a. 6.19% Comp. Rate p.a. 6.44% Minimum Loan Amount $150,000 Maximum Loan Amount $10,000,000 Maximum Loan Term 30 years Maximum LVR 80% Loan Redraw Facility Yes Offset Account Yes Split Loan Facility Yes Fixed Interest Option Yes Loan Portable Extra Repayments Yes Application Fee $0 Lender's Legal Fee $0 Valuation Fee $0 Ongoing Fees $248 p.a. Settlement Fee $350 Discharge Fee $400 Pros 100% offset account Interest only options Cons Annual fee of $248	Finder score 8.8 Great	Interest Rate 6.19%	Comparison Rate 6.44%	Fees Application: $0 Ongoing: $248 p.a.	Monthly Payment $3,063	Continue Compare
Macquarie Bank Basic Home Loan Principal & Interest20% min. depositOwner-occupier Macquarie Bank Basic Home Loan Principal & Interest20% min. depositOwner-occupier Details Fees Pros & cons Product Name Macquarie Bank Basic Home Loan Interest Rate Type variable rate Repayment Type Principal & Interest Interest Rate p.a. 6.19% Comp. Rate p.a. 6.21% Minimum Loan Amount $150,000 Maximum Loan Amount $10,000,000 Maximum Loan Term 30 years Maximum LVR 80% Loan Redraw Facility Yes Offset Account No Split Loan Facility Yes Fixed Interest Option No Loan Portable Extra Repayments Yes Application Fee $0 Lender's Legal Fee $0 Valuation Fee at cost above $300 Ongoing Fees $0 p.a. Settlement Fee $350 Discharge Fee $400 Pros $0 application and ongoing fees. Interest only options available. Fee free redraws of extra repayments made. Cons No offset account available. $400 discharge fee when you close your home loan.	Finder score 8.2 Great	Interest Rate 6.19%	Comparison Rate 6.21%	Fees Application: $0 Ongoing: $0 p.a.	Monthly Payment $3,063	Continue Compare
Greater Bank Great Rate Discount Variable Home Loan Principal & Interest-10% min. depositOwner-occupierNSW, QLD & ACT only Greater Bank Great Rate Discount Variable Home Loan Principal & Interest-10% min. depositOwner-occupierNSW, QLD & ACT only Go to site Details Fees Pros & cons Product Name Greater Bank Great Rate Discount Variable Home Loan Interest Rate Type variable rate Repayment Type Principal & Interest Interest Rate p.a. 5.99% Comp. Rate p.a. 6% Minimum Loan Amount $150,000 Maximum Loan Amount N/A Maximum Loan Term Maximum LVR 110% Loan Redraw Facility Yes Offset Account No Split Loan Facility Yes Fixed Interest Option No Loan Portable Extra Repayments Yes Application Fee $0 Lender's Legal Fee $0 Valuation Fee $0 Ongoing Fees $0 p.a. Settlement Fee $180 Discharge Fee $300 Pros $0 application fee LVR of up to 110% with guarantor Cons Requires a family guarantee Not suitable for all borrowers	Finder score 9.1 Excellent	Interest Rate 5.99%	Comparison Rate 6%	Fees Application: $0 Ongoing: $0 p.a.	Monthly Payment $2,998	Go to site Compare	Up to $2,500 cashback Eligible refinancers can get up to $2,500 cashback depending on loan value. Full terms and conditions apply.

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What is Finder Score?

The Finder Score crunches 7,000 home loans across 120+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.

To provide a Score, we compare like-for-like loans. So if you're comparing the best home loans for cashback, you can see how each home loan stacks up against other home loans with the same borrower type, rate type and repayment type. We also take into consideration the amount of cashback offered when calculating the Score so you can tell if it's really worth it.

Read the full Finder Score breakdown

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Richard Whitten

Editor

Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio

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