How does a redraw facility work?

What is a redraw facility?

A redraw facility allows you to access the extra payments you’ve made on your home loan. If you make additional repayments on your loan or pay more than the minimum payment amount, this will go towards your available redraw amount.

How is a redraw facility different from an offset account?

While a redraw facility sounds similar to an offset account and both can help you reduce the amount of interest that you pay on your home loan, they each work slightly differently.

An offset account

• Is a separate account that is attached to your home loan

• Interest is charged on the net amount between your loan principal and the balance in your offset account

• Can be used like a regular transaction account

• Comes with a debit card

A redraw facility

• Is a feature that is attached to your home loan

• Extra repayments reduce the loan principal, on which interest is charged

• Allows you to redraw extra payments that you have made (within limits set by your lender)

• Has no debit card, and money is typically moved by requesting a transfer of funds (like an EFT)

While both offset accounts and redraw facilities have their own unique benefits, if you want to pay off your home loan faster with extra payments but don’t need to access funds quite as frequently, and still pay less interest on the overall amount of your loan, a redraw facility may be for you. Remember, it’s always a good idea to seek professional financial advice to make sure you get the features that best suit your needs.

What are the benefits of a redraw facility?

Redraw facilities can be a great way to benefit from making extra payments on your home loan while also having access to that money if you need it. Putting extra money into your home loan as opposed to a savings account, helps you to pay off your loan quicker and pay less home loan interest overall.

What are the drawbacks of a redraw facility?

There can also be some fees and restrictions on your redraw facility that you should be aware of before choosing to have one on your home loan. Some lenders may charge you fees for your redraw facility, which could be in the form of a flat upfront fee or a fee per redraw, depending on the mechanism and on the amount redrawn. There may also be limitations on the number of redraws you can do, or you might have a minimum or maximum amount you can redraw, which could also limit your options.

The other drawback to a redraw facility is that you may not have instant access to the redraw funds. When you transfer your redraw amount out of your home loan and into another account, it can take a few business days for the money to appear in your account. So you may need to make the redraw a few days before you need the money to ensure you have it ready.

How to use a Qantas Money Home Loans redraw facility

To use your Qantas Money Home Loans redraw facility, you can transfer the redraw funds into one of your linked offset accounts (if you have one) or transfer them to another bank account. Your funds will be instantly available if you transfer them into one of your offset accounts (or other nominated Bendigo Bank transaction account), and should be available in up to two business days for non-Bendigo Bank accounts. Keep in mind that if there is more than one person on your home loan, you’ll both need to authorise the redraw unless you’ve authorised that only one person can transact on the home loan account. If you’d prefer to be able to redraw separately, please give one of our home loan experts a call on 1300 992 700.

Things to know about a Qantas Money Home Loans redraw facility

1. Making extra repayments could reduce the time it takes to pay back your loan. However, this does not reduce the term of the loan you have agreed with the bank, meaning your minimum repayments don’t change. Using a redraw facility won’t increase your minimum repayments or extend the term of your home loan; you’re just withdrawing the extra payments you’ve made.

2. You need to be one month ahead in your repayments (you can redraw any additional funds paid beyond the current month).

3. The minimum redraw amount is $1 per transaction.

For more information on using your Qantas Money Home Loans redraw facility, please refer to How do I redraw on my loan? in our FAQ section.

Need any help?

Our home loan experts are available on 1300 992 700 Monday to Friday: 8:00am to 6:30pm and weekends 9:00am to 5:00pm (AEST) and will be able to help answer any questions you may have. You’re under no obligation to apply, we just want to help you decide if a Qantas Money Home Loan is right for you.

You have to be a Qantas Frequent Flyer member to apply for a Qantas Money Home Loan. This website contains general advice only. This information has been prepared without considering your objectives, financial situation or needs. You should consider your circumstances before acting on this information.