When you apply for a variable UHomeLoan* you’ll have access to a redraw facility. This means if you pay more than your minimum repayments, you could build up what we like to call “available credit”, which can be redrawn or accessed by you at any time. Keep in my mind there are times when redraw might not be available. For example, if you are in default. For more information click here.
*The redraw facility is only available on our variable rate UHomeLoans, not on fixed rate loans.
How does redraw work?
We all know how home loans work: each month you’re required to pay a minimum repayment amount off your loan. But did you know that any extra repayments – like your tax return or a work bonus – can help reduce your loan amount and the overall term of your loan? This is a great feature for customers wanting to pay off their mortgage sooner.
As you’re reducing the overall loan amount, it also means the monthly interest charged will go down whenever you make an extra payment**.
Let’s break it down:
Say your minimum loan repayments are $1,500 per month and you add an extra $300 per month to that. After a year of repayments, that’s an extra $3,600 off the full principal loan amount. Not bad, huh?
It’s also $3,600 of available credit you can access. Let’s say you have a holiday coming up (yay) or an unexpected bill arrives (not so yay), you can redraw either a portion or the whole amount of your available credit using your loan redraw facility with no associated fees.
** It’s important to remember when you redraw any available credit, the interest you’re charged will change because you’ll go back to paying interest on a higher loan amount.
Features of redraw:
- Available on our variable rate UHomeLoan
- No redraw fees
- You can redraw amounts of $100 and over
- Unlimited redraws over the term of your loan
- No ‘break’ costs if you pay your home loan off early
What are the benefits of redraw?
Popping extra funds into an account you don’t normally access for saving or transacting could actually be a great way to boost your savings game. Redraw is secure, reduces the term of your home loan and if you do need to tap into your available credit, you can.
How do I redraw?
All you have to do, is login to My UHomeLoan, click payments and then click redraw. It’s easy. The redraw amount ($100 minimum) can take up to 3 business days to hit your account. Then, you can say ‘goodbye’ to that bill or ‘hello’ to that holiday.
Extra loan repayments are a great way to pay off your home loan sooner. But knowing you have a stock pile of money, just in case, could also give you some financial peace of mind, which is why we give you the option to do both.