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Redraw

01.04.16 | Marc Barlow | Resources

Most variable rate loans allow unlimited extra repayments. The surplus, above the minimum repayment is available to redraw / take back out again at any time.

Obviously this is just for an emergency, it is best to leave the surplus there as you will pay less mortgage interest and pay your home loan off sooner.

If you do need funds though, using your redraw is better than taking a credit card for example.

I suggest redraw be used in tandem with an offset account because it gives a client two separate places to put their savings. The offset is for day to day money and the redraw is for longer term savings or rainy day money. Redraw has funds sitting out of sight whereas the offset is the trading account as it can be confusing if all funds are in the one spot, having them in redraw puts them out of sight and out of mind.