Redraw facilities are a feature attached to loans whereby account-holders can withdraw money they’ve already contributed to pay off their loan. The balance of this facility consists of whatever extra payments the borrower has already made towards paying off their loan, on top of their usual repayments.

LVR stands for Loan to Value Ratio and is the proportion of money you borrow for a home loan compared to the value of the property.

According to (ASIC, 2017) Fixed home loans have an interest rate that is fixed for a set period of time – often 1, 3 or 5 years. At the end of the fixed rate term, the loan will usually switch to the standard variable rate offered by the lender.

Here are some advantages of fixing your home loan:

• Makes budgeting easier – You know exactly what you’re repayments will be, so you can plan ahead and set financial goals with confidence.
• Rate rises won’t affect you – If interest rates rise above your fixed rate, you will be happy knowing you are paying less than the variable rate.

But there are some disadvantages with fixing your loan:

• Rate drops won’t apply to you – You won’t benefit from a drop in interest rates if your fixed rate is more than the variable rate.
• Limits on extra repayments – Additional loan repayments are often not allowed with fixed rate loans or repayments may be capped at a low amount or only permitted with a fee.
• No Redraw or with fee – A redraw facility may not be offered on a fixed rate loan or fee may apply to redraw. 
• Break fees – Fixed rate loans may have a break fee if you change or pay off your loan within the fixed rate period.

This kind of loan may not be suitable if you are thinking about selling your home or want the freedom to switch home loans if you find a better deal.

Another option is to make a bet both ways by having a part fixed, part variable interest loan. A split loan allows you to manage some of the risks of interest rate rises while still being able to make extra repayments.

There’s generally no limit to the way you can split the loan, so you can allocate the funds 50/50 or 20/80 – the decision is up to you.

Whatever loan you decide to take out, it needs to work for you. That means the loan should have the features, flexibility and fees that are the most appropriate for your needs. (ASIC, 2017)