A redraw facility allows you to make extra payments on your home loan and then access this money again when you need it. By paying off a greater amount of the loan you save money, as no interest is charged on the amount already repaid, and with a redraw facility you have the security of knowing you can access the money if need be.
However, in making use of this feature it is important to look at the fine print. For example, does your bank charge you for redrawing - is there a fee for each redraw and/or a redraw facility activation fee? Is there a minimum redraw amount?
A redraw facility can be a useful way of helping you reduce the interest on your loan, but how useful it is will be determined by the specific plan that the lender offers.
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