Use of extra payment in redraw for business purpose

Hi there,

I have a friend who have been making extra loan payments for years and now he has around $230,000 he can redraw from his CBA Economiser Investment Home Loan with around $20,000 loan balance on the remaining 20 years loan term. He is looking at buying a retail shop to run his own business but not sure if he can freely redraw his money from his home loan to to do so. Could somebody here know anything about this?

Would really appreciate if some experts here are willing to shed some light.
 
He could, but should he?

Who is going to own the shop - if him that is another thing he should seek advice on.

Either way he should not be redrawing the loan but setting up a new split, or paying it down to $1 and then borrowing via redraw so that no ixing occurs.
 
Thanks Terry.

He does plan to split it, but he is more concerned about using his fund from redraw to buy commercial property for his business own use as he heard some his other friends say CBA won't allow it, and he has not got time to clarify with CBA yet.
 
He just check loan has redraw facility, which should have stated on the original loan offer letter. ( which 99% of the time people did)

or

Set up an offset account, instead of pull all the cash/equity into the saving account, your friend can park the extra cash in the offset account, which does the same thing to offset the interest and free to access the cash.


Otherwise give CBA a call. I am sure CBA will be happy to help your friend with extracting equity/cash for buying a security(commercial property in this case)
 
Thanks scha9799.

Transfer fund to the offset account seems to be a good solution. The issue is he does not feel comfortable to tell the bank ( if the bank requests for the reason or unfortunately enough to be found out by the bank ) the ultimate goal of redrawing his fund is for the purchase of a commercial property, a type of property which is not part of residential loan cover.
 
Thanks scha9799.

Transfer fund to the offset account seems to be a good solution. The issue is he does not feel comfortable to tell the bank ( if the bank requests for the reason or unfortunately enough to be found out by the bank ) the ultimate goal of redrawing his fund is for the purchase of a commercial property, a type of property which is not part of residential loan cover.


I would advise not to draw funds into an offset account.

If he worried about using redraw for this he should read the loan agreement and see if it is prohibited or if bank permission is needed.
 
Thank you all for your responses.

I think it's better to get him to look at the contract or clarify with the bank.

Thanks again and really appreciate your advices.
 
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