What is a redraw facility?

A redraw facility is a feature built into some home loans that allows you to withdraw money from extra repayments you have already made. If you pay more than your scheduled minimum payment, that surplus sits against your loan balance. With a redraw facility, you can access that surplus cash whenever you need it, rather than having it locked away.

This differs from an offset account, which is a separate transaction account linked to your loan. Money held in an offset account still counts against your loan balance for interest calculation purposes, but it remains in a working account you can use freely. A redraw, by contrast, is money you have already redirected into your loan principal and then pull back out when required.

Redraw facilities appeal to Sydney borrowers who want to build a buffer of extra repayments without losing access to that money in emergencies or for opportunities. However, not all loans include them, and some lenders impose fees or conditions on redraw withdrawals. When comparing home loans, it is worth understanding whether a redraw facility suits your repayment style and financial priorities.

A mortgage broker can explain which loan products in your situation offer redraw facilities and help you evaluate whether this feature meets your needs.