A redraw facility is one of the most widely used loan features on the market. Redraw allows you to make additional repayments into your loan account and access these extra funds when necessary. A redraw facility has two key advantages: it encourages borrowers to make extra repayments, thereby saving on interest costs, and it provides flexible access to funds when they are most needed.

When choosing a loan with a redraw facility, consider about the following:

•  How many free redraws are offered per year? Once you reach your quota, some lenders charge a set fee for each redraw, typically $10 to $50.

•  Is there a maximum redraw amount? Usually it is the total amount of additional repayments made but varies with different products.

•  What is the maximum redraw amount? Many lenders set no minimum, while others have minimum's of several thousand dollars.

Depending on the attached fees, a redraw facility works best for borrowers who need to redraw against extra repayments infrequently. If you plan to use your home loan as your main transaction account, a redraw facility may not be the most appropriate product.