Homeowners with floating rate loans have even less excuse to leave their money sitting idle, as another major lender launches a redraw facility.
ANZ Bank is now offering Flexidraw, which amounts to a redraw option on floating rate loans. What that means is that customers who have paid off lump sums or made more than the minimum repayments can get that "extra" back out again.
Before Flexidraw, they had to apply for a top-up loan, a process that involved a full credit check, loan application fees and delays in getting the funds back. The bank says that Flexidraw is available for floating rate loans taken out by homeowners or residential investors, costs $5 per redraw and has a minimum of $1,000.
Martin Shepherd, sales manager for property funding specialists Loan Plan, says many mortgage lenders offer redraw facilities on loans and they can take the discipline out of managing a line of credit product (see earlier story).
Extra funds can be put to work reducing their mortgage interest bill without the worry of leaving themselves short.
"Typically, they're not something people use as much as they think they're going to, but it gives them that flexibility if they need the money back," Shepherd says.
"A large number of flexible and redraw facilities can also be operated through a touch-tone phone now, so you can take funds from the mortgage and transfer them into the source account (that the mortgage is paid from)."
Mortgage bankers Cairns Lockie, for example, already have a redraw facility on their floating rate loan. That loan carries the rock-bottom rate of 5.85 per cent and William Cairns says there are no special or ongoing fees for the extra redraw service.
Cairns Lockie also offers a line of credit, currently at 6.25 per cent with no extra fees.
"What we're doing at the moment is combining the two. If you have a $100,000 we put that on P and I (principal and interest) and then we add on a line of credit. If the line of credit is not used, there are still no fees.
"This is a really good combination as it stops borrowers having to have expensive credit card and hire purchase debt," Cairns says.
"Borrowers should only have one debt, being their mortgage, and they should concentrate on managing it."
