Offset account vs redraw: how they differ

An offset is a separate transaction account

An eligible offset account is linked to the loan. Its balance is taken into account when interest is calculated, while the money remains in a transaction account. Product rules, fees and the offset percentage can vary.

Redraw comes from extra repayments

A redraw facility may let you access repayments made above the required amount. The lender’s terms govern access, minimum amounts, timing and whether redraw can be changed or restricted.

• Check whether the offset is 100% or partial
• Compare package and account fees
• Understand online access and transfer limits
• Read the redraw conditions rather than assuming access

Everyday access can feel different

Salary, bills and savings can flow through an offset like a bank account. Redraw is attached to the loan and may be better suited to money you do not need for everyday transactions.

Future property use can make structure important

Moving out and turning a former home into an investment can make past redraw use relevant to tax outcomes. Obtain qualified tax advice before mixing private and investment purposes.

The benefit depends on the balance you keep

A feature with higher fees or rate may not be worthwhile if the average balance is low. Compare the likely interest saving with the additional product cost.