How to access funds available from your home loan

If you need extra cash, you may be able to redraw or borrow against your home loan. Keep reading to find out whether these options are right for you.

Can I redraw?

Chances are if you’ve made a habit of paying more than your minimum scheduled repayments, then you’ll have money available for redraw. If you have internet banking, you may be able to check what, if any, funds you’ve available to redraw.

You could use this money to pay for unexpected expenses that pop up or for planned things such as holidays, renovations, school fees or a new car just to name a few. You can’t use your redraw for business purposes however.

Sometimes fixed rate loans have restrictions. Variable-rate loans are usually more flexible when it comes to redraw. Check with your banking specialist to see if it’s available with your loan or look at switching if it’s a feature you would like. Keep in mind that redraw is not available for construction loans.

How does redraw work?

The cheapest way to redraw funds is usually online through internet banking. But if this isn’t an option for you, check how much it will cost to redraw over the phone with your current lender.

The amount you can redraw at a time depends on how far ahead you are of your scheduled repayments. There’s usually a minimum and maximum amount you can redraw. It’s important to check how much you have available to redraw before you make any commitments.

After you redraw funds from your home loan, your loan’s contract still applies, and you need to make your next scheduled repayment by the due date. It’s important to remember that the interest part of your repayments will increase because you are now paying interest on a higher loan amount.

A redraw facility may be cheaper than using a credit card or personal loan as the interest charged on your home loan is usually lower than with other types of credit.

Before making any commitments, it’s important to check how much you have available, and what your options are.

The lowdown on home loan top-ups

The benefits

Topping-up (increasing your loan amount) allows you to access the equity accrued in your house. Like a redraw, you can use a top-up for all sorts of expenses. These include:

  • home improvements

  • consolidating debts

  • purchasing a new car

  • paying for a wedding

  • funding your children’s education.

A big benefit of a top-up is that it can be cheaper than other types of borrowing. This is because home loans generally have lower interest rates than personal loans or credit cards.

Things to keep in mind

Opting for a top-up on your loan means that you are increasing your mortgage. This means you’ll need to consider:

  • how much this will extend the life of your loan

  • how much your repayments will increase by

  • whether you can budget for this with your other financial commitments.

Finally, the amount you can borrow depends on your personal financial situation, the value of your property, and your bank’s standard lending criteria. For more information, speak to us on (02) 8277 4605. 

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at

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