What is a Redraw Facility?
With interest rates are at record lows, it’s a good time to be paying off a home loan.
If you can manage it financially, making repayments that are higher than the minimum can help you pay off your loan more quickly. This means the interest charged over the life of your loan will be reduced. Yipee!
Making regular extra repayments - or one-off additional payments from time to time - can make a huge difference. It could be worth making that a priority for your financial goals.
But sometimes - life throws you a curveball.
A Redrawing Facility - How it works
A family medical emergency. An unexpected bill. Car problems. Unfortunately, these are part of life!
A redraw facility can be very helpful during these times.
If you’ve been making these extra repayments on your loan, redrawing lets you take back that money. It can then be used for whatever you need it for.
Let’s look at an example, to help make it clear.
If the minimum weekly repayment on your home loan is $300 per week and you decide to pay an extra $50 a week – this will add up to $2,600 in a year.
This extra $2,600 is then available for you to withdraw at a later date, if you want.
Maybe it’s for something fun - like a renovation on your house, or a new water tank, while the rain is about!
But shouldn’t I put my money in a savings account?
You might think you will save more money by putting any money you can spare in a high interest savings account,
A redraw facility is essentially saving you money in reverse. Instead of earning interest in a savings account, you’re reducing the amount of interest you owe - saving money on your home loan.
Depending on how much you have borrowed, this could potentially work out better in the long run.
How do I redraw?
Different institutions have different procedures - but you can generally request a redraw via online banking, over the phone or by going into a branch.
The minimum and maximum redraw amounts will vary between lenders and the type of loan you have.
If you are a member with CWCU - simply log in
, check out how much you have available to redraw - and plan how you want to improve your life!
If you have any questions, our Loans Team
would love to hear from you.
Terms, conditions, fees and charges may apply – Redraw Facility is not available on Fixed Rate Home Loans
Home Loans with a Redraw Facility
Learn more about our home loans