What if you want to make extra repayments when you have a mortgage but are worried you’ll leave yourself short of money? A redraw facility could be the answer. It will allow you to withdraw extra payments made, if ever needed.
Making extra payments on your loan, as the majority of borrowers do, is a great way to reduce the term of your loan while offsetting the interest owed. Regularly putting extra money into it could knock years off the loan term and save you thousands in repayments.
The extra funds sit in your loan account, reducing the total interest you pay on the loan, yet there is the safety net of having access to the money whenever you want.
Factors that need to be considered when deciding whether a home loan’s redraw facility meets your needs can include:
- Number of redraws allowed over a certain time period
- Cost of activating/accessing the redraw facility
- Number of free redraws per year
- Minimum and maximum redraw amount
Ultimately, redraw facility are designed to allow you to make additional payments when possible, knowing that access to these additional funds is available if required.
They are not designed for excessive use, hence there are a number of restrictions that may be in place.
For more information contact Richard Windeyer on 1800 01 LOAN or click here to "Book a Meeting"