When it comes to making the most of your variable home loan, every dollar counts. Two powerful features—redraw facilities and offset accounts—can help reduce your interest and fast-track your path to financial freedom. But which one is right for you?
What Is a Redraw Facility?
A redraw facility allows you to make extra repayments on your home loan and then access those funds later if needed.
Let’s say you pay more than your minimum monthly repayment. That extra money sits in your loan, helping reduce your loan balance (and the interest you pay). If something comes up like a renovation, holiday, or unexpected bill, you can “redraw” that money.
Benefits of a Redraw Facility:
- Lowers the amount of interest you pay.
- Helps you pay off your loan faster.
- Gives you a backup pool of funds if needed.
Things to Consider:
- Access isn’t always instant, some lenders have redraw limits or delays.
- Not designed for everyday transactions.
Best suited for:
People who want to pay off their loan faster but still have a safety net. Great for disciplined savers and professionals with a long-term wealth strategy.
What Is an Offset Account?
An offset account is a transaction account linked to your home loan. The balance in the account directly offsets your loan, so you only pay interest on the difference.
For example:
- Home loan: $600,000
- Offset account balance: $50,000
- You’re only charged interest on $550,000
Unlike a redraw, this account works like a regular bank account and you can access your money at any time via card, online banking, or direct debit.
Benefits of an Offset Account:
- Full flexibility – you can access your money any time.
- Reduces the interest on your home loan every day.
- Perfect for parking your salary or savings while still having full access.
Things to Consider:
- May come with fees (especially with loan packages).
- Usually only available with variable rate loans.
Best suited for:
For individual, who want flexibility while still reducing interest. It’s a smart way to make your money work harder, without locking it away.
Redraw vs Offset: Quick Comparison
| Feature | Redraw Facility | Offset Account |
| Where’s the money? | In your loan | In a linked bank account |
| Access | May have limits/delays | Instant, 24/7 |
| Interest savings? | Yes | Yes |
| Acts like a bank account? | No | Yes |
| Best for… | Long-term savers | Daily use + flexibility |
So, Which One Should You Choose?
It depends on your financial habits, goals, and how hands-on you like to be with your money.
- Redraw is great if you’re focused on smashing your mortgage and won’t need constant access to those extra repayments.
- Offset gives you flexibility and daily access, perfect for clients with strong, consistent income who want their cash flow to work smarter.
Ready to Talk Strategy?
If you’re unsure whether a redraw or offset is right for you, don’t worry, we’ve got you. Let’s sit down and map out a lending structure that supports your goals, now and into the future.
Get in touch today for a personalised chat. You deserve a finance strategy that works as hard as you do.