A redraw facility is a home loan feature attached to your mortgage that gives you the opportunity to make extra repayments on your home loan. This helps reduce interest costs. If you want to reduce your loan amount as quickly as possible, you can place all your excess funds into your home loan, knowing that if you need to access funds at some point in the future, you’ll be able to withdraw what you’ve paid on top of your minimum repayments via the redraw feature.

You can contribute extra funds into your home loan when you’re able to, which can be a useful way to save, while also giving you access to this money should you need it later on. You can contribute extra funds into your home loan when you’re able to, which can be a useful way to save, while also giving you access to this money should you need it later on.

How is a redraw facility different to an offset account? 

A redraw facility acts in a similar way to an offset account by reducing the loan balance used to calculate the amount of interest payable, however, there are significant differences. A redraw facility may be imposed with limitation to the withdrawal amount and the number of redraws allowed per year. You may also be charged a fee for each redraw and can experience a wait for the funds to come through.

Compared to an offset account this is much less flexible and accessible, as an offset is generally set up as an everyday transaction account. Although, keep in mind that the convenience of an offset account may come at the costs of higher interest rates or additional account keeping fees.