What is a redraw facility?

A redraw facility is a feature on some home loans that lets you access money you have already paid back into the loan. When you make repayments above your required minimum, the extra funds sit against your loan balance. A redraw facility gives you the option to withdraw those extra payments if you need cash, without having to refinance or take out a separate loan.

The main advantage is flexibility. If you have been paying down your mortgage faster than the required schedule and then face an unexpected expense, you can access that money rather than leaving it locked in the loan. This differs from an offset account, where extra money sits in a linked transaction account earning no interest while reducing the interest charged on your loan, but remains completely separate and instantly accessible as cash whenever you need it.

On a redraw facility, lenders typically charge a withdrawal fee and may take time to process your request. Some facilities also carry restrictions on how often you can redraw or how much you can withdraw. Because the redraw amount directly reduces your loan balance until you take it out, the interest benefit you gain from those extra payments is temporary if you later redraw the funds.

For Gold Coast borrowers comparing loan features, understanding whether your loan offers a redraw, offset, or both matters when deciding how to manage extra repayments and maintain access to funds. Many mortgage brokers can explain how redraw facilities work with your specific loan and whether the feature suits your financial situation.