What is a redraw facility and how can it benefit a borrower?

• A. A cap on future repayments to control extra payments.
• B. A separate savings account required by the lender.
• C. A guarantee from a third party to reduce risk.
• D. A feature that allows taking back extra repayments already made; provides access to funds while still paying down the loan.

Answer: (D)

A redraw facility is a loan feature that lets you access some or all of the extra repayments you have already made on your home loan. The money you redraw remains part of the loan, so you don’t need a separate loan or credit line; you simply withdraw funds when you need them and continue paying down the loan as usual.

This offers real flexibility: if an unexpected expense or a big purchase comes up, you can tap into those extra payments rather than applying for a new loan. You still benefit from the lower balance and reduced interest when you don’t redraw, and you gain the option to redraw later if funds are needed again. Be aware that some redraw facilities have minimum redraw amounts, fees, or restrictions during fixed-rate periods, and the redrawn amount will start accruing interest again from the date you redraw.