Which home loan feature lets a borrower pay extra into the loan account itself and later withdraw those extra repayments?
Correct Answer
C) Redraw facility
A redraw facility allows borrowers to make extra repayments above the minimum required and then withdraw these additional funds when needed. This provides flexibility while potentially reducing interest costs when extra funds are held in the loan.
Why This Is the Correct Answer
A redraw facility lets a borrower make repayments above the minimum, which reduce the loan balance and the interest charged, and later draw those extra repayments back out of the loan account.
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