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. Additional payments can help to reduce the balance and the interest you pay on your loan, while redraw can be handy if you face an unexpected expense.

The redraw feature is available on Variable Rate Home Loans, however, if you have a Fixed Rate Home Loan this feature will only be available once your fixed rate term expires and switches to the variable rate.

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

  • Paying off your loan 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.
  • Interest savings - Any money available in your redraw reduces the balance of your home loan, so you’ll be paying less interest on your home loan.
  • Repayment holiday – Additional money in redraw may also give you the opportunity to take a break from your scheduled repayments. This feature is available only on ME Basic and Flexible Home Loan products. You need to speak with us in order to set a repayment holiday on your home loan.

So how does the redraw work?

The rate at which your redraw reduces is dependent on a number of factors and varies from customer to customer. The scenarios illustrated below explains how redraw works:

Scenario 1: no additional repayments; redraw unavailable

John takes out a $300,000 variable rate home loan with a loan term of 30 years and makes principal and interest repayments. The graph shows how the home loan balance will decrease over time.

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

John makes a $100,000 lump sum payment in year 10 and kept the same minimum repayments. This resulted in paying off the loan in 25 years instead of 30 years. Because John maintained his repayments at the same amount, he has redraw available for the life of the loan, albeit reducing slightly during the period. 

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

John makes 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 scheduled balance is $150,000 and the new minimum repayment will be based on $150,000. Because John reduced his repayments in line with the new balance, he has no redraw available. 

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