When seeking a home loan most borrowers are often unaware of the difference between a Offset account and a home loan with a redraw feature. Here is a summary of the differences :-

Offset account

  • Separate account linked to your home loan and earns interest on the funds held in the account, therefore reducing the interest you pay on your home loan.
  • Assists in paying the loan sooner.
  • No Minimum amount is required.
  • If the balance in the offset is higher than your loan balance then no interest paid on the excess of the loan balance.
  • The funds are available at call thereby no need to avail of redraw.

Redraw account

  • Feature of the Variable Home Loan.
  • Allows you to withdraw funds you have contributedtowards your loan over and beyond your minimumrequired loan repayment.
  • The funds in your Redraw account may reduce over thelife of the loan so that by the end of the loan term, your loan balance and available Redraw amount will be zero.

If you plan to deposit funds into the Redraw feature for a later date, then an Offset account may be better suited to your needs.


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