Redraw facility

A redraw facility allows you to access extra repayments you have made above the minimum required on your home loan. When you pay more than the scheduled amount, the surplus reduces your outstanding loan balance — and a redraw facility lets you retrieve those funds if you need them later.

How it works

Suppose your minimum monthly repayment is $2,000 and you pay $2,500 each month for two years. You have made $12,000 in extra repayments. A redraw facility lets you withdraw some or all of that $12,000 if an unexpected expense arises, while keeping the remaining surplus working to reduce your loan balance and interest charges in the meantime.

Redraw vs offset account

Both reduce the interest you pay, but they operate differently:

	Redraw facility	Offset account
How it works	Extra repayments reduce the loan balance; you can redraw them	Separate account balance offsets the loan balance daily
Access	Withdraw on request (may take 1–3 business days; some lenders cap withdrawals)	Instant access via debit card or transfers
Fee	Often included in basic variable loans at no extra cost	Typically requires an annual fee premium
Tax	Redrawing can complicate tax deductions on investment loans	Offset balance does not affect loan structure

Things to watch

• Minimum redraw amounts: some lenders require you to redraw at least $500–$2,000 at a time
• Processing time: redraw is not always instant — offset accounts usually are
• Investment loans: redrawn funds used for private purposes can complicate interest deductibility; get tax advice before redrawing on an investment loan
• Fixed-rate loans: many fixed-rate products do not allow redraw during the fixed period

Is an offset account better than redraw?

For everyday access, an offset account is more flexible. For cost-conscious borrowers who rarely need to access the funds, a basic loan with a redraw facility is often cheaper because the annual fees are lower. Use the Mortgage Offset Savings Calculator to compare the fee premium against the interest saving for your specific balance.