Making the most of advance funds and redraw1 options on your home loan?
Did you know that any extra repayments you’ve made on your mortgage are stored as “advanced funds”, available to be withdrawn or transferred back via “redraw” into your everday account if you need them? This is another way to have flexibility around how you manage your finances, so you can access your savings on your terms.
What are advance funds?
Advance funds are any additional payments you’ve made on top of your required home loan repayments. If you’ve paid more than your minimum repayment or deposited a lump sum, these amounts accumulate in your loan account. Your redraw facility means you can access this surplus money, less a buffer of one monthly required repayment, when you need it.
How to access advance funds?
Accessing your advance funds through a redraw facility is easy:
- Bank branch or phone banking: You can request a withdrawal by calling us or popping into a branch.
- Online Redraw: You can access your advance funds through your internet baning if you are registered for Online Redraw. If you’re not yet registered, contact the branch for quick and easy set up.
What can you use your advance funds for?
You don’t have to use your advance funds, as leaving them in your loan account will reduce the interest you pay, but it helps to know they’re there if you need them. They’re often used for:
– Unexpected expenses: Withdraw lump sums for big bills or emergencies.
– Home Improvements: Use the money for renovations or repairs around the house.
– Big purchases: Whether it’s buying a car or booking a holiday, your redraw facility can help cover larger expenses.
– Debt consolidation: You could use the funds to pay off higher interest debt like credit cards or personal loans.
What happens when you access your advanced funds:
Keeping extra money in your redraw facility helps reduce the interest you paym. This is because the additional funds lower your outstanding loan balance, and interest is calculated on that reduced balance. So, accessing your advance funds through a redraw will increase your loan balance, which means you’ll pay interest on additional amount.
While home loan interest rates are typically lower than credit cards or personal loans, withdrawing from your redraw facility increases your loan balance, reducing this benefit and adding to your overall costs over time. It’s also important to understand that drawing on your loan reduces your equity in the property which could affect your financial situation if you plan to sell, purchase another property or refinance.
What fees will you pay to access advance funds?
In branch:
– Enjoy 1 free withdrawal per month
– After that it’s $10.00 per withdrawal
Via online banking:
– Enjoy 1 free withdrawal per month
– After that it’s $5.00 per withdrawal
We’re here to help
Want to know more about how to make this flexible feature work for you and your finances? We’d love to help. Swing by our branch or call us on 4047 6900 for a chat.
- Advance Funds and Redraw Facility: For the Classic product, the maximum excess repayments that can be made for advance funds, and the maximum redraw that will be allowed, will be $50,000. For the Plus product, the maximum advance funds and the maximum redraw allowed is $100,000 in aggregate. There is no maximum in respect of other loans.
Terms and conditions, and fees and charges, apply. All information is subject to change without notice. Full details are available on request. ↩︎
