How does a redraw facility work?

What is a redraw facility?

A redraw facility may allow you to access eligible extra repayments you have made above the minimum required repayments on your variable rate home loan. These extra repayments reduce your outstanding loan balance while they remain in the loan, which may reduce the interest you pay.

Your available redraw is not a separate account balance. It is linked to your loan balance and may change over time. The amount available is generally the eligible extra repayments you have made, less previous redraws, permanent loan balance reductions, other debits and any amount held back for your next scheduled repayment.

How is a redraw facility different from an offset facility?

Both features may help reduce the interest charged on your home loan, but they work differently.

An offset account

• Is a separate offset account or offset sub-account that is linked to your home loan

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

• Can be used like a regular transaction account

• May come with a debit card

• May have a monthly or annual servicing fee

A redraw facility

• Is a feature that is attached to your home loan

• Allows eligible extra repayments made directly to the loan to be accessed later, subject to approval and the loan terms.

• Reduces the outstanding loan balance while the extra repayments remain in the loan.

• 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)

Both offset facilities and redraw facilities have their own characteristics. Remember, it’s always a good idea to seek professional financial advice to make sure you get the features that best suit your needs.

Why use a redraw facility?

Making extra repayments may reduce your loan balance and the interest charged while those funds remain in the loan.

You may be able to access any eligible extra repayments you’ve made later, using the redraw facility. .

In this way, extra repayments may help you repay your home loan sooner if they remain in the loan and you continue to meet your repayment obligations.

When a redraw facility may not suit you

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.

A redraw facility may not allow you instant access to redraw funds. When you transfer your redraw amount out of your home loan and into another account, it might take a few business days for the money to appear in your account. 

Making extra repayments could reduce the overall time it takes to pay back your loan. However, this does not change the terms of your home loan, meaning your minimum repayments don’t change. Similarly, accessing advanced repayments (redraw) won’t increase your minimum repayments or extend the term of your loan.

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. 

Already a Qantas Money Home Loans customer? 

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.

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.