Should I withdraw redraw before refinancing?

First identify why you want the cash

Keeping an emergency buffer, paying for renovations and moving money for a future investment are different purposes. Decide the intended cash balance and facility amount before choosing when to redraw. Do not assume a last-minute withdrawal leaves the approved refinance unchanged.

Worked example: the approved amount can become insufficient

You owe $400,000, have $30,000 available redraw and have arranged a $400,000 refinance. Withdrawing the $30,000 increases the old debt to $430,000. The approved $400,000 refinance is now $30,000 short before settlement interest and fees.

One alternative is to arrange a $430,000 facility from the outset, subject to assessment, then agree how the surplus will be disbursed. Another is to leave the debt at $400,000 and accept that the old redraw access ends. Neither option is automatic.

Does a withdrawal change your LVR?

On a $550,000 valuation, $400,000 is about 72.7% LVR; $430,000 is about 78.2%. With an additional $15,000 of financed costs or cash-out, the facility would be $445,000, about 80.9%. A small change can therefore cross a pricing or insurance threshold. These are arithmetic examples, not a lender offer.

Before making a transfer

• Ask for the new facility and old payout figures both with and without the withdrawal.
• Confirm whether a withdrawal triggers reassessment, updated documents or a settlement change.
• Agree whether surplus will go to a transaction account, offset or another destination.
• Keep the new borrowing purpose and transaction trail clear where investment use is contemplated.

Understand the balance sheet first

Read what happens to redraw when refinancing for the debt-versus-cash explanation. Then use the refinance comparison with the actual facility and fees.

Sources and verification

• ANZ Plus: treatment of redraw when refinancing
• Borrower discussion: refinancing with available redraw

General information only. It is not personal financial, tax or legal advice. Finance approval, pricing and structure are subject to lender assessment and your circumstances.