Can a bank refuse to give you redraw funds?

[beachgurl]

I obtained a top up from a loan with the blue smurfs to use for another project. I've now received that money back from the project and want to offset it back to that account. I don't want to put it in the linked offset account as it is also our everyday transaction account. On speaking with the bank, they advised that there is no guarantee I can get the funds back out of the loan account from redraw when I need them again. Something about the funds required being higher than they would usually allow.

Is this standard for redraw or is it the exception that your redraw funds aren't necessarily yours to withdraw again for the next project? FYI it's under 100K so it's not a massive amount.

 

[perthguy]

Is this standard for redraw or is it the exception that your redraw funds aren't necessarily yours to withdraw again for the next project? FYI it's under 100K so it's not a massive amount.

Is there an option to set up an offset account?

 

[beachgurl]

Is there an option to set up an offset account?

No, I already have an offset account for that property and the smurfs said I can only have one offset account per property.

 

[Peter_Tersteeg]

Technically I think the fine print says they can refuse redraw. Never seen it happen though.

 

[Jamie M]

Sounds weird. I've never seen it happen.

Which lender is it?

Cheers

Jamie

 

[Corey Batt]

Redraw is at the lenders discretion, but as mentioned it certainly is odd if a lock-out is ever enforced.

Which lender - might have just been an overzealous staff member providing the information.

 

[wombat777]

No, I already have an offset account for that property and the smurfs said I can only have one offset account per property.

Odd. My offset account has multiple sub-accounts, all of which contribute to the offset. Quite useful for separating funds for different purposes and to hopefully make things easier for my accountant. Once I get my first IP, intent is to direct any profit into another sub-account.

 

[Terry_w]

Odd. My offset account has multiple sub-accounts, all of which contribute to the offset. Quite useful for separating funds for different purposes and to hopefully make things easier for my accountant. Once I get my first IP, intent is to direct any profit into another sub-account.

I can see no tax benefit in doing this. There may even be a detriment if you are diverting cash into an offset secured against an investment property. if they are sub accounts all the interest should still be coming off the main loan anyway.

but it may be a good for money management type planning.

 

[Marty McDonald]

It's sounds like the blue lender "that lives in our world" (smurf reference?). They only allow one offset per loan.

If the amount is less than $100K I wouldn't be too worried about not being able to access it as redraw but as Terry mentioned this may not be a good move if there is any chance of the property becoming an investment property down the track.

 

[Martin Walmsley]

Blue Lender

The Blue smurfs as you put it will not with hold your redraw unless you have defaulted on another loan or have a restraint in place due to legal proceedings etc etc. Sounds like you spoke with a Personal Banker or teller with limited lending knowledge. It is also possible they were referring to over the counter cash withdrawals as they limit the amount of physical cash without notice. Also the blue guys have been known to close a loan off if you pay it off in full regardless of your intent to keep it open. If this happens it is almost next to impossible to get your loan limit back without providing new income documents and a new loan application. Unless you are clearing the debt entirely (ensure you always owe them something) I would not be too concerned.

 

[Jess Peletier]

They sometimes have these clauses to protect them in the event a GFC type thing happens again. I know U-bank have similar in their T&C. (Random fact for you all! )

 

[Peter_Tersteeg]

During the GFC some financial institutions refused access to borrowers savings accounts. Goes to show they can probably do whatever the heck they want.