Debt Management and Leverage

Residential property mortgages

Principal and interest loan with redraw facility or offset account

In some cases, you have the option to repay your loan at a faster rate than required by making extra or higher payments.

With this option on a loan, if you pay off more than is required you may have access to the additional payment through a redraw facility. This allows you to re-borrow the amount of money that you are ‘in front’ if your circumstances or plans change.

If you re-draw, the amount of borrowings or debt subsequently increases by that amount.

On your statement you’ll see the borrowings/debt balance increase. It will increase the interest amount or proportion of your loan repayments too.

In some cases the extra money can be deposited into a separate offset account. This account earns no interest, but you will also pay no interest on the corresponding amount of your loan. The money is available to withdraw at any time.