Redraw

Redraw is a loan feature that lets you withdraw any extra repayments you've made above the minimum. Functionally it looks similar to an offset - both let you access spare cash and both reduce the interest charged. The crucial difference is tax: pulling money out of a redraw on an investment loan changes the purpose of those funds. If you redraw $50,000 to renovate your own home, the interest on that $50,000 is no longer deductible even though the loan is secured against an investment property. For this reason, investors usually park surplus cash in an offset account instead of using redraw, even though redraw is often the default on basic products.