What Happens to Redraw Funds When You Refinance?

• 

  elgrande on 05/12/2022 - 20:24

  AFAIK, if you don't redraw it will be taken off the balance of the loan, but best to ask your lender.

  • 

    rick5042 on 05/12/2022 - 20:34

    Thanks. My total loan is $350,000 and have $80,000 in redraw. When I refinance and don't withdraw my savings from redraw before settlement, will the refinancing bank only give me loan for $270,000? Will I lose access to my savings of $80,000 and reduce my loan total loan balance down to $270,000?

    • 

      Tony-Abbott on 05/12/2022 - 20:41

      +2

      Thanks. My total loan is $350,000 and have $80,000 in redraw. When I refinance and don't withdraw my savings from redraw before settlement, will the refinancing bank only give me loan for $270,000? Will I lose access to my savings of $80,000 and reduce my loan total loan balance down to $270,000?

    • 

      boomramada on 05/12/2022 - 20:41

      +1

      Ask the lender / bank, once they used all my redraw as part of the settlement.

• 

  Leanne59 on 05/12/2022 - 20:24

  When you look at the payout/refinance figure of your loan it already has the redraw funds (or advance payments) taken off the balance. If you withdraw the advance payments or "redraw funds" then your payout figure will go up by the amount you withdraw.

  • 

    rick5042 on 05/12/2022 - 20:34

    Thanks. My total loan is $350,000 and have $80,000 in redraw. When I refinance and don't withdraw my savings from redraw before settlement, will the refinancing bank only give me loan for $270,000? Will I lose access to my savings of $80,000 and reduce my loan total loan balance down to $270,000?

    • 

      Tony-Abbott on 05/12/2022 - 20:41

      +3

      Thanks. My total loan is $350,000 and have $80,000 in redraw. When I refinance and don't withdraw my savings from redraw before settlement, will the refinancing bank only give me loan for $270,000? Will I lose access to my savings of $80,000 and reduce my loan total loan balance down to $270,000?

      • 

        RockyRaccoon on 05/12/2022 - 21:21

        +2

        So is Rick, Tony or Tony, Rick, or is Tony just a Parrot. And do you live in a house that straddles the VIC/SA border?

        • 

          Tony-Abbott on 05/12/2022 - 21:24

          @RockyRaccoon: I figure he's literally posted the same thing 3 times, may as well make it 6.

          • 

            avoidfullprice on 05/12/2022 - 22:10

            @Tony-Abbott: But you need to repeat this slower so I understand it the 7th time

• 

  Polt on 05/12/2022 - 20:41

  Can't speak to redraw, but did have a similar situation with offset. I had about $10k in my offset during refinance that I left. This came off the payout for my old bank, and the excess (equivalent to my offset balance) was waiting for me in an account at the new bank, since this amount didn't need to get paid to the old bank.

  I would confirm with your new bank that they are going to pay out $350k, and ask them what they will do with the excess not required for payout if the old loan.

• 

  JIMB0 on 05/12/2022 - 20:43

  +2

  If you refinanced for $350k then $270k would go-to your existing bank to payout the loan and the remaining $80k minus fees would be put into the attached account at the new bank.

• 

  ULT on 05/12/2022 - 20:44

  The answer is yes, you will lose the redraw of 80k (technically the loan is 80k less but you will no longer have access to it, especially if you agree to the refinance at the current 270k balance). They will treat it as a loan of 270k. If you do not want that, take out the 80k first before refinancing so that you refinance the entire 350k.

• 

  avoidfullprice on 05/12/2022 - 20:45

  +3

  You are confused.

  You nominate a loan amount to refinance with.

  The new loan amount will pay out the old loan.

  The surplus will then be put back into your new loan as redraw.

  So if your refinance amount is 300k. Then 270k will be paid to the old bank. You will have 30k sitting in your new mortgage as redraw. Your loan balance is 270k

  • 

    JIMB0 on 06/12/2022 - 09:12

    They'll put the 30k in an account rather than on the loan. They want you to spend it and pay interest.

• 

  thatonethere on 05/12/2022 - 21:26

  When we refinanced with NAB the redraw amount was consumed and considered a paydown against the loan (ie no longer available after refinance but the overall amount was reduced).

• 

  jjjaar on 05/12/2022 - 21:49

  +1

  It really depends on how you set up the new loan, whether you want to loan $350k again or $270k (or any amount in between, really). You should have the choice.

  Ask your lender for information on how to fill in the forms to make sure the new loan is set up how you want it.

• 

  Wilson Heroes HL on 05/12/2022 - 22:38

  Hey Rick

  If you wish to keep your redraw you must refinance the whole loan amount (ie 270K + 80K in redraw) as if you just refinance only the outstanding balance 270K, you will lose your redraw of 80K.

  Let me know if you have any more questions

• 

  footyboy on 06/12/2022 - 07:00

  +1

  Broker here - if your new loan is $350k, you'll keep the redraw funds. Simple.

  Aidan.

  • 

    rick5042 on 08/12/2022 - 07:31

    Thanks 🙏