How a Redraw Facility Can Help You
Managing your home loan well can give you more flexibility and help you pay it off sooner. For many borrowers across Wollongong and the Illawarra, a redraw facility is one of the simplest ways to reduce interest while still keeping access to extra funds when life happens. Here’s how it works.
What is a redraw facility?
A redraw facility lets you access any extra repayments you’ve made on your home loan. Instead of those funds simply reducing your loan balance in the background, you can withdraw them later if needed.
How does a redraw facility work?
Say your minimum repayment is $3,600 a month, but you regularly pay $3,800. After a year, you’ve built up $2,400 in extra repayments.
If an unexpected cost comes up, like urgent home repairs or a big bill, you can redraw some or all of that money straight from your loan.
Benefits of a redraw facility
• Every extra repayment reduces your loan balance, which means paying less interest over the life of the loan.
• It gives you more control over your cash flow, without relying on high-interest credit cards or personal loans.
• Accessing your redraw is usually simple through online banking or by contacting your lender.
For many local homeowners, it’s an easy way to get ahead financially without locking their money away.
Things to keep in mind
While redraw facilities offer helpful flexibility, it’s worth considering a few points:
• Some lenders may charge a fee to redraw, or place limits on how much you can access at once.
• Not all loans include a redraw option, and features can vary widely between lenders.
• Withdrawing funds increases your loan balance, which may mean paying more interest over time than if you left the funds untouched.
Redraw vs offset accounts
Offset accounts and redraw facilities both reduce the interest charged on your home loan, but they work differently. Offset accounts are ideal if you want regular access to your money for everyday banking. A redraw facility is great if you prefer a simpler structure and don’t need constant access to your extra repayments.
If you're weighing up which option suits your style, we can walk you through the differences.
Ready to make your mortgage work smarter?
Choosing the right loan features can make a real difference to your long-term savings. If you’d like to understand how a redraw facility could work with your current home loan, or you want to compare options across Wollongong and the Illawarra lenders, we’re here to help.
📞 Get in touch today to explore your home loan options.