Home Loan with Redraw Facilitiy

spedohero on 28/10/2022 - 11:54

Hello,

I want to check if anyone know which bank that offer home loan with redraw facility and has the following features.

The advance payment sits in redraw and can be withdraw anytime via online.
The repayment amount can be reduced to minimum repayment without having to use the amount in redraw account to pay off the principal.

To give some context when I was with the old uBank basic home loan.

The numbers are just an example.

Mortgage amount is $500k
Minimum repayment amount per month is $1000 for a loan term of 30 years
I put in $250k in redraw account
Daily interest calculated based on balance. $500k - $250k = $250k

These are the features I am seeking.

uBank automatically recalculated the minimum repayment to be $500 per month. I can reduce the initial repayment of $1000 to $500 on my own via online or app. I believe the minimum repayment is worked out based on the loan term of 30 years.

Of course, you can continue to repay $1000 per month which will obviously reduce the loan term.

If I am keeping up to my minimum repayment, the $250k sitting in redraw account is not used to pay off the principal. I can withdraw anytime via online or app, and the minimum repayment will be automatically adjusted upwards.

I knew the old uBank offer these features on redraw not sure about the current uBank.

I checked with few big banks. They don't offer such features. They don't reduce the repayment amount even if you are ahead of payment. It will just simply reduce the loan term. To reduce the repayment amount they will have to use the amount in redraw account to pay part of the principal.

Thank you

Financial

Comments

  • WreckTangle on 28/10/2022 - 12:12

    Interesting. Haven’t heard of anything like this before.

    • spedohero on 28/10/2022 - 12:18

      Ok, I am recalling now.

      When I signed up home loan with uBank, i did not know my loan is actually coming from advantedge.

      https://www.advantedge.com.au/home/borrowers

      It seems like at that time, uBank is just a platform, i have to login to advantedge to check my loan payment. The features i mentioned are coming from advantedge.

      • CyberMurning on 28/10/2022 - 12:40

        correct they always been from advantage thing
        im with them too

        • spedohero on 28/10/2022 - 12:42

          But I rang the new uBank contact, they told me they don't offer these features.

          I supposed you login to starnet to assess your current home loan?

  • kawinuyo on 28/10/2022 - 12:16

    Are you sure you're not looking for an offset instead.

    • spedohero on 28/10/2022 - 12:16

      No. 100% not offset.

      Does amount in offset reduce minimum repayment?

  • filmer on 28/10/2022 - 12:20
    +1

    Most banks will not recalculate the minimum repayment if you deposit a large sum into your redraw, they may if you call and ask, but not automatically.

    If you want this you will have to work out the interest saving from the 250k and reduce your payment by that much. If you do this it should keep your account at the 250k available for redraw.

  • Porker on 28/10/2022 - 12:32
    +1

    I'm currently with Bank of Queensland and I believe it has what you're after.

    However, whether it's like like ubank old vs new account situation, then I can't say, but my mortgage allows redraw and the interest amount is calculated monthly against the remaining mortgage amount/balance.

    I have since opened a few new mortgages with Bank of Queensland but since that redraw function impacted the investment deduction, I simply went down the offset route. Functionally the same, but the there are no tax-deduction implications of the offset where there were with the redraw.

    I should add though that the above is for my 'interest only' mortgage. There are minimum repayments for my 'principle and interest' mortgage, but the redraw with that account only influences the percentage proportioned to each, not the actual minimal payment amount.

    • spedohero on 28/10/2022 - 12:44

      Right, thank you for the information.

  • TheMills on 28/10/2022 - 12:34
    -1

    This is an interesting insight about home loan repayments. Can I ask why don’t u :
    A) ask Ubank itself
    B) your mortgage broker if you have one
    C) relationship manager for you loan account.

    • spedohero on 28/10/2022 - 12:37
      +2

      A) asked. The guy from new uBank said they don't offer these features.
      B) I don't have a broker
      C) I don't have a relationship manager maybe because I don't have alot of assets.

      D) so I asked here on a wider public to benefit those who prefer redraw facility.

      Cheers

  • Seraphin7 on 28/10/2022 - 12:53

    Sounds like you're looking for a line of credit mortgage.

    • Muzeeb on 28/10/2022 - 12:59

      Is that how the CBA viridian works? I have NFI.

    • spedohero on 28/10/2022 - 13:02

      Interesting. The line of credit seems to be explained the features.

  • brichman on 28/10/2022 - 12:59
    +1

    I am currently doing this with CBA. I put $150k into redraw, called up, and they recalculated my monthly repayment. I don't believe it is automatic, but i think they said you can call up twice a year for them to recalculate it. The adjustments are automatic if you take money from the redraw, but not if you add it.

    • spedohero on 28/10/2022 - 13:01

      Nice! But can you still access that $150k in your redraw, the amount visible in your account?

      Ok I rang them. They said no minimum or maximum times to recalculate the minimum repayment. The redraw is still available for customer to withdraw and may reduce overtime to pay off the principal.

  • mortgagebroker on 28/10/2022 - 13:14
    +1

    Go back to Advantedge. Any mortgage broker can get you a loan with Advantedge. Will be called something else like PLANLend or FastLend but is the same as the old ubank loan.

    • spedohero on 28/10/2022 - 13:17

      Yeah, I actually just dropped them an email checking which platforms do they offer their loan through.

      I am sure there are few brokers on ozb. :)

  • Donaldhump on 28/10/2022 - 13:40
    +3

    all i can say is redraws are a tax trap. the second you make ur house a rental and move to another your tax screwed
    just go with offset and pay the minimum.

    i had a suncorp mortgage 20 years ago 100% offset and they changed my minimum monthly payment to 30c. not sure if they still operate that way, but it seemed dodgy as one day the repayments would balloon

    CBA change their monthly repayment, taking the shortfall from the redraw if that helps.

    ie your mmr is now $500, and the other $500 is taken off your redraw balance.

    imho redraw sucks, just use offset pay the $1000, then borrow 50k again in 5 years or whatever and put straight into offset again if you want to keep a offset balance of 250k etc.

  • SmiTTy on 28/10/2022 - 13:46

    I haven't seen any lender offer this and I don't think it exists. (the auto adjustment). The funds in your offset is yours so most if not all allows you to withdraw when you want

    Do let us know if you find one

  • JIMB0 on 28/10/2022 - 20:30
    +1

    CBA let's you use the redraw like a line of credit. Take money out and put it back same as a bank account.

    You can then go into your account and adjust the automatic repayment amount to match the amount owing. It can be set as low as $1 a month.

    • spedohero on 28/10/2022 - 21:56

      I am suprised it allows to go below than the minimum repayment.

      • JIMB0 on 28/10/2022 - 22:45
        +2

        It doesn't. The minimum amount is based the interest rate, outstanding term and outstanding balance.

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