What Is Redraw With Your Home Loan?

Today’s question is an email from John in Yokine, and he asks what is redraw on a home loan? Do all home loans have redraw?

Lets looks at what redraw on your mortgage is first. Redraw are the funds available in your home loan, that you have paid extra on top of your minimum repayments. For example, if your monthly home loan repayment is $2,000 and you are paying $2,500 per month, the extra $500 may be available as redraw from you home loan.

You may also have redraw available on your home loan if you pay the occasional bulk payment. For example, you may get a bonus payment from your work, of say $1,000. If you pay this into your mortgage, on top of your minimum repayments, you may have the $1,000 to redraw if you need it in the future.

All banks and lenders have different rules when it comes to redraw. Generally speaking redraw is only available on variable rates mortgages, but some banks and lenders do offer redraw on fixed rate home loans. Redraw may not be available on all home loans, if you are unsure, contact me or your bank or lender to find out.

Some lenders may have a minimum redraw from your home loan. For example your bank or lender may have a $1,000 minimum redraw from your home loan. This would mean that you would need a minimum $1,000 before you can redraw from your home loan. Some lenders may also charge a fee for redraw and this can vary from nothing to $50, plus.

Redraw can be a very handy feature with your home loan. It can enable you to make extra repayments, which can pay your home loan down faster, and have those funds available, if you should ever need them.

If you have any comments please leave below, or you can contact me if you would like more personal finance information.

http://www.mortgagefacts.com.au/