What is the difference between redraw and offset?
A redraw facility allows you to access any additional repayments you have made on your loan. Only the amount over and above the minimum required repayments is available.
If you are in a position to make additional repayments, having a redraw facility on your loan is a great way to save money as you are reducing the interest on your loan while still having the flexibility to access those funds if you need to.
An offset account is an everyday transaction or savings account that’s linked to your variable home loan. You can move money around, pay for items or services via a debit card, and make deposits.
The real benefit comes when the monthly interest on your loan is calculated. Instead of charging you interest on the full loan amount you owe, your lender will first subtract the balance in your offset account. Put simply: the more you have in your offset account, the more you save on interest.
For example, let’s say that you have a home loan of $300,000. If you have $20,000 deposited in your offset account, the bank will only charge you interest on a loan balance of $280,000.
Redraw facility: Pros and cons.
Pros
- Paying down your principal. A redraw facility is a good option if you’re able to make extra repayments and are focused on paying off your loan principal quicker.
- Occasional lump sum access. Redraw facilities are a great feature if you only need access to your funds now and again. Your money is not locked away and you can still redraw for any sudden or planned expenses, such as home renovations or a new car.
- A great place to save. While the amount you deposit* into your redraw account you won’t earn interest, it will reduce the amount you pay in interest on your home loan.
Cons
- Accessing your money. Beyond Bank allows you to access money from your redraw facility immediately (minimum withdrawal amount $500). However, this isn’t the case with all banks so it’s a good idea to check with your lender if there’s a wait to access your money.
- Withdrawal restrictions. Some home loans with redraw facilities may have a minimum withdrawal amount and additional fees⁺, including a fee every time you want to access your money. At Beyond Bank, you can withdraw your money for free via Internet or Mobile Banking⁺.
- Variable rate home loans only. If you’re looking for a fixed rate home loan, you may struggle to find one that comes with a redraw facility.
Offset account: Pros and cons.
Pros
- Easy access. Like an everyday bank account, access to the cash in your offset account is instant. You can deposit and withdraw your money as often as you like.
- Incremental savings - Offset accounts are a great alternative to redraw facilities if you can’t afford to make additional or lump sum repayments. That’s because you’re still able to reduce your interest repayments based on your account deposits and direct debits.
- Tax incentives. An offset account is a great place to deposit any other sources of income you have, such as investment profits. Because the money in your offset account doesn’t gain interest, it’s not considered taxable income. If you’re an investor however, there may be other tax implications so it’s always best to check^.
Cons
- A need for discipline. Instant access to your cash may be a disadvantage if you’re likely to keep dipping into your account.
- Variable rate home loans only. Offset accounts are generally not offered with fixed rate home loans.
Still have questions about offset and redraw?
Speak with a Lending Specialist to learn more about how you can use an offset account or redraw facility to your advantage. You can call us on 13 25 85, visit a branch, or organise a call back.
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Please read this important information.
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Unlimited additional repayments available on Variable Rate Loans. Repay an additional $25,000 per year on any of the Fixed Rate term without fee or penalty. Additional repayments over $25,000 per year to a Fixed Rate term will result in a break cost being payable. |
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Minimum redraw amounts may apply. Free redraw in-advance amounts at any time through Internet Banking and Mobile Banking. Fees apply for staff-assisted redraw. An amount equivalent to the next scheduled repayment for the loan cannot be redrawn from the in-advance amount. |
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Please note that transfers made on Internet Banking and Mobile Banking can take up to 24 hours to process. For immediate transfers please call us on 13 25 85 or visit a branch. |
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The tax information provided here is a general statement and does not constitute tax advice. We recommend that you seek independent tax, legal and/or financial advice where appropriate. |
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All applications for credit are subject to Beyond Bank’s credit assessment criteria. Terms and conditions are available on request. Fees and charges apply. This information is available on our website at beyondbank.com.au/about-us/corporate-governance/disclosures, by calling us on 13 25 85 to request a copy or by visiting a branch. |
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This information is of a general nature only and does not take into consideration your objectives, financial situation or needs. The information must not be relied upon as financial product advice. Before acquiring any product you should read the relevant guides, Product Disclosure Document, and consider whether a product is suitable for your circumstances to decide if a product is right for you. |
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All products and services are provided by Beyond Bank Australia Ltd, 100 Waymouth Street, Adelaide, SA 5000, ABN 15 087 651 143 AFSL/Australian Credit Licence 237856. © 2025. |