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Home Loan Redraw

Mon, 08/03/2009 - 11:10

Redraw on a Home Loan

Redraw on your existing home loan may be an alternative in certain cases as opposed to refinancing a home loan. Redraw usually becomes available on most home loans once the principle home loan amount originally approved, has been reduced. Many lenders will allow borrowers to access these funds back up to the original loan amount using redraw.

The two main benefits of redraw are that redraw can allow you to make additional payments to your home loan which will contribute to savings on interest costs and redraw allows borrowers to access these funds when additional money is needed.

Most, but not all, home loans offer redraw. If redraw is a feature of importance when refinancing or choosing a new home loan, carefully check the redraw policy for each lender as there are many variations to options offered.

Minimum and maximum redraw amounts can be imposed by some lenders. Many, but not all, lenders charge a fee for each redraw transaction and some lenders have a limit on the amount of redraw transactions that are allowed.

Some lenders make the redraw process relatively easy while others may require attendance at a branch and special forms to be provided.

Usually the redraw feature works best for those who only redraw on their home loan occasionally. An option favoured by borrowers who wish to access funds on a more regular basis may be a line of credit account secured by their property.



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