Redraw facilities are most commonly associated with a variable-rate loan. If you have a fixed-rate loan, a redraw facility might be an option once you’ve reached the end of the fixed-rate period. The end of the fixed- rate period is when the rate becomes variable.
In most cases, redraw is also not available for construction loans.
Some lenders set a minimum amount for withdrawal – usually $500 – while others allow you to redraw small amounts.
Some charge a fee for each withdrawal, either from the outset or after you’ve made a certain number. Some cap the number of withdrawals each year.
These are important considerations, but if you’re committed to paying off your home loan faster, you should aim to limit redraws where possible.
You must also remember that when you’ve completed a redraw, your regular repayment will be the same however the interest will increase.