Compare home loans with no redraw fee

Find home loans from a wide range of Australian lenders that best suit your needs, whether you're investing, refinancing or looking to buy your first home. Compare interest rates, mortgage repayments, fees and more. - Data last updated on 21 Jan 2019

Compare no redraw fee home loans

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Home loans with no redraw fee 

Before you agree to take on a home loan it is necessary to understand the facilities many home loan providers offer if you find yourself suffering financial difficulties, or if perhaps you just want some extra cash for a holiday or a new car. Some home loan lenders offer such a redraw option and that may be something for you to consider when deciding on a lender. Providers sometimes attach fees when you choose to redraw repayments but many offer zero fees if you have multiple loans with the provider, or have signed up to a special home loan.

What does redraw mean? 

Quite simply the redraw facility is the ability to access payments you have made on your loan when you’ve made extra repayments above the minimum requirement. You can choose to make extra repayments during any part of the loan and then redraw them to use when needed. In some cases it can be difficult to determine whether a home loan provider charges redraw fees. Home loan comparison websites like RateCity are one of the best ways you can quickly and easily find out the basic features of home loans and they often include the redraw feature in their comparisons. 

Why should you use the redraw facility?

Using the redraw facility can be a great option for you, both as a way to reduce interest costs by making extra payments and as a flexible way to access funds when needed. The ability to redraw funds can be an incentive for you to make extra repayments on a home loan because you can access the funds whenever you need them. Making extra repayments is the best way to decrease the cost of the loan over its life by reducing the total amount of interest you pay. Mortgage calculators will indicate the large amounts you can save by making extra repayments. As well as saving money in the long-term, having the option to redraw can be a great way to save funds for emergencies.

What redraw fees do providers charge?

There are different ways in which home loan providers can charge you for the redraw facility. Many have an additional fee on the total cost of the home loan for having the option to redraw funds. Others choose to charge you a one-off fee each time you redraw funds from your home loan, or charge you each time you redraw over a specified limit. As you can see none of these home loans are ‘no redraw fee’ options. Providers may also limit or restrict the amount you can redraw. The best way to prevent any future problems is to check home loan providers’ policies or use a comprehensive home loan comparison website.

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FAQs

They’re impersonal 

Most comparison sites give you information about rates, fees and features, but expect you’ll pay more with a low advertised rate and $400 ongoing fee or a slightly higher rate and no ongoing fee. The answer is different for each borrower and depends on a number of variables, in particular how big your loan is. Comparisons are either done based on just today or projected over a full 25 or 30 year loan. That’s not how people borrow these days. While you may take a 30 year loan, most borrowers will either upgrade their house or switch their home loan within the first five years. 

You’re also expected to know exactly which features you want. This is fine for the experienced borrower, but most people know some flexibility is a good thing, but don’t know exactly which features offer more flexibility than others. 

What is the flexibility score?

Today’s home loans often try to lure borrowers with a range of flexible features, including offset accounts, redraw facilities, repayment frequency options, repayment holidays, split loan options and portability. Real Time Ratings™ weights each of these features based on popularity and gives loans a ‘flexibility score’ based on how much they cater to borrowers’ needs over time. The aim is to give a higher score to loans which give borrowers more features and options.

They’re not always timely

In today’s competitive home loan market, lenders are releasing new offers almost daily. These offers are often some of the most attractive deals in the market, but won’t get rated by traditional ratings systems for up to a year. 

The assumptions are out of date 

The comparison rate is based on a loan size of $150,000 and a loan term of 25 years. However, the typical loan size is much higher than that. Million dollar loans are becoming increasingly common, especially if you live in metropolitan parts of Australia, like Sydney and Melbourne. It’s also uncommon for borrowers to hold a loan for 25 years. The typical shelf life for a home loan is a few years. 

The other problem is because it’s a percentage, the difference between 3.9 or 3.7 per cent on a $500,000 doesn’t sound like much, but equals around $683 a year. Real Time Ratings™ not only looks at the difference in the monthly repayments, but it will work out the actual cost difference once fees are taken into consideration. 

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^Words such as "top", "best", "cheapest" or "lowest" are not a recommendation or rating of products. This page compares a range of products from selected providers and not all products or providers are included in the comparison. There is no such thing as a 'one- size-fits-all' financial product. The best loan, credit card, superannuation account or bank account for you might not be the best choice for someone else. Before selecting any financial product you should read the fine print carefully, including the product disclosure statement, fact sheet or terms and conditions document and obtain professional financial advice on whether a product is right for you and your finances.

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