What is a redraw facility?

A redraw facility is a home loan feature attached to your home loan - not a separate account. It lets you withdraw any extra money you’ve paid above your scheduled minimum repayments.

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Your extra repayments reduce the outstanding loan balance. Interest is then calculated on a smaller amount, which can save you money over the loan’s life. If you need those funds back later, you can withdraw (or ‘redraw’) them.

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Redraw facilities are most commonly available on variable rate home loans.

How does a redraw facility work?

A redraw facility tracks the extra repayments you’ve made above your scheduled minimum. Those funds reduce your loan balance and lower your interest charges. They remain accessible through your redraw balance.

Redraw facility example

Say your minimum monthly repayment is $2,500, but you’ve been paying $3,000. After 12 months, you’ve made $6,000 in extra repayments ($500 × 12 months).

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That $6,000 has been reducing your balance and lowering your daily interest charges. If you need those funds later, you can redraw up to $6,000 from your home loan.

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Every time you redraw:

• The available redraw balance decreases
• Your loan balance increases - and interest is recalculated on the higher balance
• Future interest accrual reflects the updated balance

How you access your redraw depends on your lender. With Unloan, you can redraw online at any time - with no fees and no transaction limits.

What happens when you redraw from your home loan?

When you redraw, you pull money back out of your loan that you previously paid in. This gives you cash flexibility for emergencies or planned expenses.

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Key points:

• Redraw reduces the amount you’ve repaid ahead of schedule
• Your loan balance increases by the amount you redraw
• Some lenders charge fees or impose processing delays. With Unloan, redraws are fee-free and processed instantly.

Not all lenders allow online redraws – some require forms or phone calls. With Unloan, you can redraw directly through the app.

What are the features and benefits of a redraw facility?

A redraw facility offers flexibility and cost savings. Common benefits include:

• Lower interest costs — extra repayments reduce your principal, so daily interest is charged on a smaller balance
• Access to extra funds when you need them – for emergencies, renovations, or other major expenses
• Cash flow flexibility without needing to refinance or take out a separate loan
• Potential to pay off your loan sooner – more of each future repayment goes toward principal, not interest

Extra repayments can save on interest. Redraw gives you the option to access those funds later if circumstances change.

Are there fees or restrictions with redraw facilities?

Lenders may apply:

• Minimum redraw amounts
• Fees per redraw request
• Limits on redraw frequency
• Verification requirements

Always check your loan’s Terms and Conditions for specific redraw conditions.

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At Unloan, there are no limits on how often you can access your redraw. There’s no minimum redraw amount and no fees. You can redraw online anytime through the Unloan app.

Are there tax implications when using a redraw facility?

If you are claiming tax deductions connected to your loan, a redraw may impact your income tax deductions.

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The tax implications will depend on your particular circumstances, you should ensure that you understand the implications or seek professional tax advice before making any decisions in relation to a redraw facility.

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Tax rules can be complex. You may want to visit the ATO website or speak with a registered tax agent, accountant or adviser if you’re unsure.

How does a redraw facility tie into your repayment strategy?

A redraw facility can complement your repayment goals. Extra repayments reduce interest costs over time. Having redraw access gives you a safety cushion.

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It’s important to:

• Balance savings against liquidity needs
• Know your redraw conditions and any restrictions
• Consider other options like offset accounts

When might you prefer offset over redraw?

An offset account may be preferable if you want:

• Everyday access to your funds
• Savings automatically reducing your interest
• Fewer restrictions on withdrawals
• To preserve tax deductibility on an investment loan

A redraw facility may be better when:

• You want to minimise fees
• You’re already making extra repayments
• You want interest savings tied directly to the loan
• You prefer slightly restricted access to help maintain savings discipline

What should you check before using redraw?

Before using your redraw:

• Review minimum redraw amounts
• Check for fees or charges
• Understand processing times
• Confirm how it affects your loan balance
• Consider whether the property may become an investment in future

This helps avoid unexpected costs or delays.

Can you redraw on a fixed rate home loan?

Redraw facilities are most common on variable rate home loans. Some lenders offer redraw on certain fixed rate products, but it’s less common.

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There may be extra restrictions - for example, you might only be able to redraw once the fixed period ends. Check your loan terms or ask your lender directly.

What happens to your redraw balance when you pay off your loan?

When your home loan is fully repaid, any remaining redraw balance is typically applied to the final payout. Some lenders let you withdraw the balance before the loan closes. Others apply it automatically.

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If you’re close to paying off your loan, check with your lender. Understanding how your remaining redraw funds are handled avoids surprises.

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Ready to make the most of your extra repayments? Unloan’s redraw facility has no fees, no limits, and no minimum amount. Explore how Unloan’s redraw feature works, or find out how much you could save by refinancing with Unloan.`