what happens to redraw amount when mortgage is paid off
When your mortgage is paid off entirely, the redraw amount or balance typically depends on the terms and conditions set by your lender and the specific features of your mortgage. Here are the common scenarios for what happens to the redraw amount when your mortgage is paid off!
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Redraw Available: In many cases, if you have funds available in the redraw account when your mortgage is paid off, you can choose to withdraw those funds. This allows you to access the money you've previously paid into the mortgage for any purpose you desire, such as investments, home improvements, or other expenses.
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Partial Redraw: Some lenders may allow partial redraws even before the mortgage is fully paid off. This means you can access a portion of the extra payments you've made at certain intervals. The remaining amount can be withdrawn once the mortgage is completely paid off.
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Automatic Closure: In some situations, lenders may automatically close the redraw account when the mortgage is paid off. This means that any funds remaining in the redraw account are transferred to you or another designated account.
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Transfer to Savings Account: In some cases, lenders may transfer the funds from the redraw account to a designated savings account. This can be done automatically upon mortgage payoff, and you can continue to manage those funds as you would with a regular savings account.
It's crucial to review your mortgage agreement and communicate with your lender to understand their specific policies regarding redraw accounts and what will happen to any remaining funds when your mortgage is paid off. The options available to you may vary depending on the lender, the mortgage product, and the terms you agreed upon when you initially set up the mortgage and redraw account.