Redraw facility.

Mechanic: when you pay more than the scheduled monthly mortgage repayment, the surplus reduces the loan balance. Many lenders allow you to 'redraw' that surplus later, withdrawing it back into your transaction account, increasing the loan balance again. Redraw is typically free at majors but some non-majors charge per-transaction fees ($20-50 per redraw).

Redraw vs offset comparison: cashflow effect is similar (both reduce daily interest). Tax treatment differs materially: redraw on an investment loan creates a 'mixed-use' problem. Once you redraw funds for personal use (renovation, holiday, car), the loan becomes partially non-deductible, requiring split-loan reconstruction. Offset has no equivalent contamination risk because the offset balance is in a separate account.

When redraw is the right tool: (a) owner-occupier mortgage where deductibility doesn't matter, (b) you want to consolidate cash within the loan rather than maintaining a separate offset account, (c) lender doesn't offer offset (rare in 2026, most do).

Redraw restrictions: lender can place minimum redraw amounts ($500-1,000 typical), maximum redraw amounts (e.g. $50K/month), processing time (24-72 hours), or freeze redraw entirely during arrears or refinance applications. Read the loan disclosure before relying on redraw as your liquidity buffer.