What is Redraw When You Have a Home Loan?

1 July 2026 - 5 min read

If you can afford to increase your mortgage repayments or pay off part of your home loan, it's great to know you're making extra inroads into your outstanding balance. Not only could you pay off your mortgage sooner, but you may be able to reduce the amount of interest you pay over time.

But what if a rainy day is on the horizon and new financial circumstances mean you now need the money you've used to increase your minimum scheduled repayments? Planning ahead for changes in your financial situation makes good sense – but it may put you off increasing the minimum amount paid each fortnight or month.

That's where setting up a redraw facility comes in. With redraw you can access the extra money you've paid towards repayments on your home.

That means you can adjust and optimise the way you make mortgage repayments, without the inconvenience of your extra contributions being locked away.

Key take-outs

• Increasing mortgage repayments or making one-off payments reduces your home loan balance
• Additional payments can build funds in a redraw facility
• If you need cash for anything, you can access these funds online or in branch
• Money kept untouched in a redraw facility helps you reduce interest payments and shorten the length of your mortgage.

What are the benefits of a home loan redraw facility?

By increasing your payments above the minimum – or making lump sum extra payments – you could enjoy a number of benefits:

• Pay off your home loan sooner
• Build your potential redraw balance for future use
• Dip into the spare money if you need it
• Enjoy the peace of mind of having accessible funds
• Take the option of a break from future payments if you're already well ahead.

Plus, the extra money contributed counts against the amount you still owe the lender when they calculate interest charges. This could potentially reduce the amount of interest you pay on your home loan.

How does redraw work?

Here's a scenario using example numbers for interest rates. You can see current Westpac home loan interest rates on our interest rate page.

• Let’s say you have $535,000 left to pay on your first home
• The interest rate is 6.09% p.a. and the comparison rate is 6.42% p.a.
• Your minimum monthly repayment is $3,239
• You can afford to pay an extra $200 a month
• Over the course of a year, you make additional payments of $2,400.

You can leave these additional repayments alone, reducing your loan balance and potentially the amount of interest you pay. Or, you can use all or some of your $2,400 available redraw to spend as you wish – for example, to pay for renovations or to pay bills or settle your credit card debt. 

Just remember that while paying extra to reduce your loan balance can reduce the interest rate you pay, dipping into your redraw funds may increase the amount of interest you pay on your home loan.

What's different about Westpac redraw?

You can apply for redraw with Westpac whether you have a variable rate mortgage or a fixed rate loan. With some lenders, redraw is not available with a fixed rate mortgage.

Better still, if you have our split loan, you can shift your funds ‘available' for redraw into whichever fixed or variable account has the higher interest rate at the time, to pay less interest.  

Westpac variable rate home loan:

• Make unlimited extra repayments
• Get unlimited access to redraw funds ($100K daily limit online but no limit in branch)
• No withdrawal fees or potential break costs.

Westpac fixed rate home loan:

• Make up to $30K repayments during fixed term
• Access up to $30K redraw funds online or in branch
• Break costs¹ may apply if limits are exceeded.

How do I set up my redraw facility?

Your lender will have their own set-up steps, so check with them. If you have a Westpac mortgage, setting up and activating redraw is simple:

1. Sign in to Online Banking
2. Select 'Home loan settings'
3. Select 'Manage redraw' 
4. Follow the instructions, including choosing the transaction account to redraw funds into and out of.

Alternatively, print out our Redraw Authority form (PDF 98KB) and return it completed to your nearest branch.

Redraw activation can take up to 1 day online and up to 1 week after receiving your form. 

How do I use redraw?

Your lender will have their own redraw steps and limits – and if they have daily online or in-branch redraw limits, it may take a number of days to access your money. 

If you're with Westpac, simply:

1. Sign into Online Banking and select your home loan account
2. Select 'Transfer' to move funds to a Westpac account, or 'Pay' to transfer to a separate account with another bank.

You can use an existing transaction account to receive the funds or set up a dedicated redraw account. Then if you're with Westpac, use Online Banking to view your available redraw balance.

Should I have a redraw facility or an offset account?

Whether you choose to only use your redraw facility or to add an offset account linked to your home loan depends on your personal circumstances. Both redraw and offset strategies could help you make interest savings and pay off your home loan faster.  

The main differences are how you deposit and access extra funds.  

With a redraw facility, you can only access available funds by transferring them to a transaction account that lets you withdraw them or use them to make payments. An offset account is like an everyday transaction account, allowing you to withdraw offset funds and pay for things directly without having to move money.

If you want to be less tempted to spend your extra cash and focus on paying off your home loan, you may prefer a redraw facility with its slightly more restricted access. If you want greater flexibility and access to your additional funds, an offset account might suit you better.

Some variable home loans allow you to have both a redraw facility and an offset account, so you can enjoy the best of both worlds.  You can use your offset account to receive your salary and withdraw money on a regular basis, and your redraw facility for one-off payments.

Should I have a redraw facility or a savings account?

Depositing into a home loan's redraw facility is different to depositing into a separate savings account. It's important to consider the differences when deciding which is right for you. The main four are:

• Type of interest: A savings account pays interest on the amount deposited. A redraw facility doesn't pay interest – it reduces the interest payable on your home loan.
• Amount of interest: Home loan rates are generally higher than most savings and term deposit rates. Depositing into a redraw facility is likely to result in a greater interest saving on your home loan than the amount of interest paid on a savings account. Make sure you check and compare the rates before deciding.
• Savings account limitations: Some savings accounts have minimum deposit requirements or tiered interest rates – and lower balances month-to-month or insufficient transactions may lead to little or no interest. On the other hand, every cent you keep in your redraw facility (or an offset account) will help you save interest charges on your home loan.
• Tax liability: Interest earned from savings accounts is usually considered taxable income, but if you’re saving interest on your home loan (such as by using an offset) it isn’t considered income, so it’s not taxed. For any questions about your personal tax situation, we suggest talking to the Australian Taxation Office, or your financial advisor.

Choose the right option for you

Choosing the right kind of home loan is an important decision, so it's worth doing your research and getting independent financial advice.  

If you have any questions about a redraw facility with Westpac, or any of our home loan products, request a call back to talk to a home loan specialist about your options.