What is a redraw facility?

Everything you need to know about a redraw facility, from what it is, if it impacts your home loan repayments to what happens when you redraw.

Put in the extra work on your home loan repayments, but life’s thrown a bit of a curveball at you? Did you know you can access those additional repayments with a redraw facility?

What is a redraw facility?

A 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.

How does it impact my repayments?

Any funds in your redraw facility will reduce the balance owing on your home loan, which means you’ll pay less interest on your home loan! Learn more about how putting money in redraw can help you reduce interest on your home loan here.

What happens when I redraw from my home loan?

The additional repayments in your redraw facility can be ‘redrawn’ for any reason. For example - if you need them to cover an unexpected expense, like renovations or bills, or even a holiday. When you choose to withdraw available funds from your redraw facility, you increase your home loan balance, and may increase the time it takes to pay off your home loan. If you choose to redraw, you should consider any financial impacts, for example any tax implications. You might want to get financial advice.

Is it the same as an offset account?

Redraw facilities & offset accounts give you a way to use spare funds to reduce interest charges on your home loan balance, making it possible to pay off your home loan sooner. One key difference is a redraw facility isn’t a separate account, but a feature attached to your home loan – this means no separate BSB & Account Number.

Learn about the difference between a redraw facility and an offset account.

Please note we do not offer offset accounts at Unloan.

Is a redraw account covered by the government’s Financial Claims Scheme?

A redraw account is not covered by the Financial Claims Scheme, as it is not a deposit account.

Learn more about Unloan and applying with Unloan here.

‍

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.

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.

^ 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. This discount is applied to each loan that you have with Unloan. If you have multiple loans (e.g. one investor and one live-in loan), they will each have a discount calculated based on when you settled each loan. Unloan may withdraw this discount at any time.

There are no fees from Unloan. However, there are some mandatory Government costs depending on your state when switching your home loan. For convenience, Unloan adds this amount to the loan balance on settlement.

* Other third-party fees may apply. Government charges may apply. Your other lender may charge an exit fee when refinancing.

Related articles

How to easily calculate your potential mortgage repayments
What is a repayment holiday?
How do banks calculate your borrowing capacity?

Calculations are not a loan approval. Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions will be set out in our loan offer, if an offer is made.

^Rates shown are inclusive of a 0.01% p.a. discount off our reference rate. On each anniversary of your loan’s settlement date, you will receive an additional discount of 0.01% per annum, up to a maximum discount of 0.30% per annum. For purchase loans with a Loan to Value Ratio (LVR) between 80.01% - 90% LVR, a lenders mortgage insurance (LMI) premium and higher interest rate apply. In some cases depending on the property’s location or type, LMI may also be required for LVR between 70.01% and 80%.

*Comparison rate is calculated on a $150,000 secured loan over a 25 year term. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

A home loan you can love

Low rates, with a discount that gets better and better.

No fees from us

No application fees, no account-keeping fees, no annual fees.

Apply in minutes

Switch to Unloan today.

Built by CommBank

Unloan is a digital home loan, built by Australia's leading bank.