Redraw Facilities at ME.

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Important information.

The below information applies to your redraw if you have the following home loan products:

StandardME Home Loan

Please note: these products are no longer offered to our customers.

Don’t have one of these products, or not sure how find your type of home loan?

What is redraw?

Redraw is a variable home loan product feature that gives you access to additional payments you have made on your loan above the scheduled minimum. Additional payments can be in the form of lump sum deposits or by making higher recurring repayments than the minimum. These additional payments can help to reduce the balance of your home loan and the interest you pay on it.

While the redraw feature is designed for infrequent use, it can be handy for those times you face an unexpected bill, or you need access to money for a big ticket item, like a getaway, or adding that much needed second bathroom. The amount of money that you have available in redraw will go down as your loan progresses towards its end date.

Where is redraw available?

The option to fix a rate is not available on the StandardME Home Loan. The below information applies to home loans that had a fixed interest rate when they were moved to a StandardME during the transition to ME Go.

If you already had available money in redraw prior to starting the fixed rate period, the redraw amount will need to be reduced completely – you can do this by moving it all to a separate account (in which case your fixed rate loan balance will be higher) or you can reduce your home loan limit by the amount of the redraw prior to commencing your fixed rate. You can make up to $30,000 in extra payments during the fixed-rate period (going above that amount will attract a prepayment fee), however you won’t be able to access the redraw amount until the end of that fixed rate period.

Offset account.

There are other ways to reduce interest payable on your variable home loan – having an offset account can be a good way to reduce the interest charged on your home loan while also giving you access to your money whenever you need it.

With an offset facility linked to one of ME’s transaction accounts you can make deposits or withdrawals, as you would with a regular transaction account, meaning an offset account is often more suitable if you plan on using - and needing access to - your funds more regularly.

Benefits

What are the benefits of being in advance and having redraw available?

Interest Savings.

Any money available for you to redraw reduces the balance of your home loan, so you’ll be paying less interest on your home loan.

Paying your loan off sooner.

You can make additional lump sum repayments or regularly pay more than your minimum required repayment.

This will build up the balance you have available to withdraw later via the redraw, and may reduce the time it takes to pay off your home loan.

So how does redraw work?

The rate at which your redraw reduces and the amount available is dependent on a number of factors and can vary for every customer. Here are a couple of scenarios to help explain how redraw works:

Scenario 2:
Additional repayment as a lump sum; same repayments; redraw available.

John made a $100,000 lump sum payment in year 10 and maintained the same repayments. This resulted in John paying off the loan in 25 years instead of 30 years.

John has over $100,000 of redraw available (the redraw grows over time due to repayments being above the minimum) until his loan is repaid.

Scenario 3:
Additional repayment as a lump sum; reduced repayments; redraw unavailable.

John made a $100,000 lump sum payment in year 10 and requested to reduce the minimum repayments in line with the actual balance. This means John's new minimum repayment will be based on $150,000 from year 10 – reducing his repayments.

Later in year 15 John uses $30,000 of redraw taking his balance back up to $160,000. This means John's new minimum repayment will be based on $160,000 from year 10 – increasing his repayments. At all times John’s minimum repayment ensures the loan will be fully repaid over the 30 year loan term.

Frequently asked questions.

What’s an offset account?

An offset account is a transaction account that’s linked to your home loan – but instead of earning interest, the money in the offset account acts to reduce the interest your loan accumulates. With an offset account you can make deposits or withdrawals, as you would with a regular transaction account, meaning an offset account is often more suitable if you plan on using - and needing access to - your funds more regularly.

What’s the difference between an offset facility(account) and redraw?

A redraw facility works differently to an offset account. With a redraw facility you can make additional payments to reduce the outstanding balance of your mortgage, which in turn reduces the amount of interest you pay on your home loan. The difference between your scheduled home loan balance and your actual home loan balance is known as redraw. The amount of redraw you have available will reduce over time to ensure you pay off your loan within its contracted term.

Conversely, in the case of an offset account, the balance of the offset account is subtracted from the outstanding balance of your mortgage, and you only pay interest on this difference. Unlike redraw, funds deposited in an offset account will not reduce over time.

Should I have an offset facility or redraw?

Depending on the product you have with ME, both of these features can be available with your home loan. If you want access to the full amount of extra money you have saved toward your home loan, then an offset facility could be better for you. However, with an offset facility you won’t have the ability to reduce your regular repayments.

Paying extra money into your home loan and having available redraw can work for customers looking to reduce their repayments or access cash in the future for larger purchases or expenses.