Understand how redraw facilities work and how they can help lower your interest costs.
See the key differences between redraw and offset accounts.
Learn how to access redraw, when it’s available, and what to consider.
An Aussie Broker can help you compare loans with redraw or offset features.
In today’s higher-rate environment, many Australians are looking for practical ways to reduce the interest they pay on their home loans. A redraw facility is one of the simplest tools available, especially for borrowers who regularly make extra repayments.
A redraw facility lets you withdraw eligible extra repayments you’ve made on your home loan. Each eligible extra repayment reduces your loan principal, which means less interest is charged. If you later need access to those funds, you can “redraw” them, subject to your lender’s rules.
Redraw facilities are commonly found on variable rate home loans. Some fixed-rate products offer limited redraw access, but the conditions and restrictions vary by lender.
How redraw helps reduce your interest
If you consistently pay more than your minimum repayment, you reduce your loan balance and therefore the interest charged.
Example:
If you pay an extra $300 a month on a $600,000 home loan, you could reduce your loan balance by more than $9,000 in just over two and a half years before interest savings, lowering the interest charged on your mortgage over time.
With a redraw facility, those extra funds remain available should you need them later.
Example only. Actual outcomes vary depending on your loan, interest rate, and repayment behaviour.
Try our Extra Repayments Calculator to estimate how much you could save using redraw.
How to access your redraw funds
Redraw access depends on your lender and loan type. You may be able to redraw through:
your lender’s mobile app or online banking
BPAY or account transfer
a manual request via your lender
Some lenders allow near real-time redraw, while others take 1-3 business days. Withdrawal limits or minimum redraw amounts may apply.
Can you have a redraw facility on a fixed rate loan?
Some lenders provide redraw on fixed-rate loans, often with restrictions.
These may include:
limits on how much you can redraw
delays in accessing funds
caps on how much you can repay without triggering break costs
Always check your fixed-rate loan terms or speak with a broker before relying on redraw.
Benefits of a redraw facility
1. Reduces your loan interest
Extra repayments directly reduce your loan principal, lowering the interest charged.
2. Helps you build a financial buffer
Redraw lets you access additional repayments if needed, giving you flexibility without permanently losing funds.
3. Encourages long-term repayment habits
For borrowers who rarely withdraw their redraw balance, extra repayments can meaningfully reduce overall interest.
4. Usually included at no extra cost
Most variable home loans include redraw automatically, though specific fees vary by lender.
Drawbacks to be aware of
1. Access delays
Some lenders take 1-3 business days to process redraw requests, which may not suit urgent expenses.
2. Withdrawal conditions
Minimum redraw amounts or limits may apply. Some lenders restrict redraw on fixed-rate loans.
3. Not ideal for daily spending
If you need frequent access to funds, an offset account may be more suitable.
4. Redraw balance may reduce when refinancing
When you refinance, your redraw balance is usually applied directly to your loan (not paid out as cash). If you need access to those funds beforehand, speak with your broker first.
Redraw facility vs offset account: What’s the difference?
Both redraw and offset can help reduce interest, but they work in different ways.
Offset vs redraw: Key differences
Feature | Redraw Facility | Offset Account |
Where your extra money goes | Directly into your home loan as extra repayments | Held in a linked savings/transaction account |
Access to funds | May take 1-3 days; conditions may apply | Instant access, like a regular bank account, depending on account type and lender |
Fees | Possible withdrawal or minimum redraw fees | Often part of a package loan with an annual fee |
Effect on interest charged | Reduces the loan balance itself | Offsets the balance used to calculate interest |
Ideal for | Borrowers who make extra repayments and rarely withdraw | Borrowers who want flexible, daily access to savings |
You might also be interested in: What is a mortgage offset account?
Which one suits you better?
Redraw may suit you if:
You make consistent extra repayments
You prefer a simple loan structure
You don’t need frequent access to your extra funds
Offset may suit you if:
You keep substantial savings on hand
You want easier, faster access to funds
You use your account daily or for budgeting
You might also be interested in: Refinancing for debt consolidation
Tax considerations for investors
Borrowers purchasing an investment property often choose offset accounts, as withdrawing redraw funds may affect tax deductibility. Your accountant can advise on what suits your situation.
Borrower scenarios: How people use redraw in real life
First-home buyer
A first-home buyer making small extra repayments uses redraw as a buffer for unexpected expenses, helping them adjust to homeownership.
Investor
An investor may prefer an offset account instead of redraw, as it can simplify record-keeping for tax purposes.
Refinancer
A homeowner consolidating debts refinances into a loan with redraw, using extra repayments to rebuild a financial buffer while keeping access to funds.
Redraw vs offset in today’s market
With interest rates remaining higher than in previous years, more borrowers are weighing redraw versus offset.
Redraw remains a practical option for borrowers who make steady extra repayments and prefer structured saving. Offsets tend to appeal to borrowers who hold higher savings balances or want daily liquidity.
How digital lenders handle redraw
Some digital lenders offer near instant redraw through mobile apps, while others require manual processing with longer wait times.
Before relying on redraw for emergencies, confirm how your lender handles withdrawals and any conditions that may apply.
How to get a redraw facility (or add one when refinancing)
Most variable loans automatically include redraw. If your current loan doesn’t offer it, you may be able to:
switch to a product with redraw
refinance to a loan with more flexible features
request redraw activation through your lender
An Aussie Broker can help compare products across multiple lenders and explain how redraw fits into your financial goals.
Your home loan features can make a real difference to how quickly you pay down your mortgage.
Book a free^ chat with an Aussie Broker to explore home loans with redraw or offset features and find an option that fits your goals.