All lenders have revolving credit mortgages available. A revolving credit is where part of your mortgage sits in your transaction account. As long as your income exceeds your expenses then you will pay off the mortgage faster. However a revolving credit is not for everyone and that’s where redraw can be a better option.
The challenge with revolving credit is that having everything go through your transaction account can get confusing and hard to manage. Any additional funds are too easy to access and you’re never quite sure if you are getting ahead!
Redraw is simply the lender allowing you to redraw funds that you have paid off. So rather than have everything going on in your transaction account, you can simply transfer any extra funds into your Floating mortgage. That way, just like the revolving credit, you pay the mortgage off faster. The benefit is that it is a separate mortgage account so there is a clear delineation between the mortgage and your day-to-day transactions and budget.
If you need some of the funds back you can simply draw the funds back down on the mortgage and transfer to your transaction account.
Unlike Revolving Credit there is no monthly on standard term mortgages and therefore redraw. In a lot of ways I think redraw is better than revolving credit!
Lenders that have Redraw Available:
- Westpac
- ANZ
- BNZ
Lenders that DO NOT have Redraw:
- National Bank
- ASB
