Offset and redraw can both reduce interest in some circumstances, but access, ownership and operation differ.
How an offset account works
An offset is a transaction account linked to an eligible loan. Its balance is generally offset against the loan balance when interest is calculated.
- Separate transaction account
- May support salary and bill payments
- Can attract package or account costs
- Availability depends on loan product
How redraw works
Redraw is access to eligible additional repayments already made into the loan. Access rules, limits and timing depend on the lender and product.
Tax and purpose considerations
The treatment of withdrawals and loan purpose can matter, particularly for investment lending. Obtain tax advice before using redraw or changing the use of a property.
Which feature may suit?
The answer depends on how you manage money, fees, access needs, discipline and future plans. A feature is not automatically valuable merely because it is available.
Common questions
Does every variable loan include offset?+
No. Some offer full offset, partial offset or no offset, and fees may vary.
Is redraw guaranteed to be available?+
Access is subject to lender terms, product rules and available eligible repayments.
This guide does not consider your objectives, financial situation or needs. Lending policies, government programs and thresholds can change. Obtain current credit, legal, tax or financial advice as appropriate.