A redraw facility is a feature which lets you withdraw any additional repayments you’ve already made towards your home loan. It differs from an offset account in that it is not a separate bank account, but a feature which sits inside your home loan.
You will generally only be able to redraw funds that exceed you minimum repayments.
Its important to remember that withdrawing those extra repayments will mean that those funds are no longer reducing the interest on your home loan.
You may want to redraw funds from your surplus for a number of reasons. Such as paying for unforeseen expenses; like an emergency or an investment opportunity. Or you might want to use the money for planned things like a renovation, vacation or a new car. Most importantly, redrawing from your loan could mean you don’t have to apply for another loan.