One of the benefits of making extra repayments on your home loan is being able to redraw some of those funds when you need them. To make the most of this feature of your home loan we explain how it works and how you can use redraw to achieve small or large goals.
Give me the main points
- If you’ve made extra payments on your home loan and it has a variable interest rate, you may be able to access some of these funds with a redraw.
- A redraw facility gives you the ‘peace of mind’ of knowing you may have a flexible source of funds sitting in your home loan account for any planned or unexpected events
- An added bonus of making extra repayments is that you are reducing the amount of interest you pay on your home loan.
- Redraw is usually available with all NAB variable rate home loans. If you have a fixed rate loan, redraw is only available at the end of the fixed rate period.
- If your loan has a variable rate, you can make unlimited extra repayments without economic costs. However with a fixed interest rate, if you pay ahead more than $20,000 during a fixed rate period, you may have to pay economic costs.
- Redrawing on your home loan can be cheaper than using your credit card or personal loan as there is generally a lower interest rate.