Understanding how the redraw facility feature at Unloan works

Our redraw facility gives you the ability to access additional repayments that you’ve made on your home loan, over and above the minimum monthly repayments. You can make regular contributions or a one-off lump sum contribution to your redraw facility.

You have the flexibility to access these extra repayments whenever needed. These withdrawals are also instant! When you maintain an available redraw balance, it can also help reduce the interest charges on your home loan balance, making it possible to pay off your home loan sooner.

Your redraw makes up your total loan balance

For example, your principal loan balance is $500,000 and you currently have a redraw balance of $100,000. This means your total loan balance is $400,000. Your daily interest accruals are calculated based on this total loan balance. The presence of a redraw balance helps reduce the variable interest rate charges on your home loan, because interest will be applied to $400,000, and not $500,000.  

Our redraw feature can help you reduce interest on your home loan

In the illustration below, your monthly repayment amount consists of two components: principal and interest charges.

When you deposit funds into your redraw account, your principal remains unchanged based on your initial loan balance and term. However, because the interest amount is recalculated daily, it reduces the interest payable you accrue daily. This means this reduces the interest charged for that period, which in turn, will adjust your total monthly repayment amount.

It is important to note that withdrawing funds from your redraw account will result in increased interest charges. The AutoPay minimum amount is calculated based on the assumption your redraw balance is equal to zero.

If you have funds in your redraw account, your AutoPay payments will add to your redraw balance. You can choose to redraw these funds or continue to let your redraw balance grow.

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This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍

Unloan is a division of Commonwealth Bank of Australia.

Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).

Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.

*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.