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What happens to my redraw money when I refinance?
Bayley Clarke · Mortgage broker on the road · Last checked 1 November 2026 · 3 min read
The short answer
There are two numbers on your home loan: the balance and the limit. When you refinance, we either refinance the balance, and you lose access to the extra money you've put in as redraw, or we refinance the limit, and you keep access to it.
Either way the extra repayments have still paid down your loan. The question is whether you can still get your hands on that money once you've switched, so it's really important to understand the difference before you do.
The 90 second version, filmed from the driver's seat. The rest of this page is the detail underneath it.
Balance versus limit
Your loan limit is the amount the bank has approved you to owe right now. Your balance is what you actually owe. When you make extra repayments, or use your home loan as a savings account by putting money in so you can take it back out later, your balance ends up lower than your limit. The gap between the two is your redraw.
So if your limit is $500k and you've got $40k of extra repayments sitting in there, your balance is $460k and you've got $40k available to redraw. That $40k is still cutting the interest you pay, but it's money you could take back out if you needed it.
Your two options when you refinance
Option one is refinancing the balance. The new lender pays out the $460k you owe, your old loan closes, and the $40k of redraw is gone as available money. It's not lost, because it has already paid off your loan, but you can't take it back out.
Option two is refinancing the limit. You apply for the full $500k, the new lender pays out your old loan, and the extra $40k comes across to you. Once the refinance is done, we can chuck it straight back into the new loan or an offset account, and you're on your merry way with the same access you had before.
What refinancing the limit involves
Refinancing the limit means you're applying for the higher amount, so you need to qualify on the full limit, not just what you owe. And because the extra money is being paid out to you, some lenders treat it as cash out. Many will let you take a set amount without proving what it's for, above that they'll want to know the purpose, and the rules tend to tighten if your loan is above 80% of the property's value.
The other route is simply redrawing the money before you switch and parking it in a savings account, then refinancing the smaller balance. Which way makes sense depends on how much is in redraw, what you want it for, and whether you'd pass on the bigger number.
The honest bit: this one catches people out
Plenty of people treat redraw like a savings account and don't realise it can disappear in a refinance. If nobody asks the question, it's easy to refinance just the balance without realising what that means.
So before you switch, check how much is sitting in redraw and decide what you want to happen to it. That's something I do as part of every refinance, and I get to charge the bank for the work that I do, not you.
Refinancing with money sitting in redraw?
A 30 minute call. We check what's in redraw, whether to refinance the balance or the limit, and what the switch actually saves you.
No cost to you. The bank pays me when a loan settles. · How I get paid
Next question
What is redraw?Redraw is extra money paid onto your home loan. It cuts interest like an offset, but it's the bank's money until you ask for it back.
Related answers
The full guide: Refinancing with a broker Offset account or redraw: which one should I use? What does cash out mean, and what will the banks accept as a reason for my cash out? What does refinancing actually cost? When is refinancing a bad idea?Not your question? Book a call and ask it, or call 0437 189 939.