Same interest saved — but the benefit shows up in two very different ways. Here's how to tell which suits you.
An offset account and a redraw facility reduce the interest you're charged in exactly the same way. Park $50,000 against a $600,000 loan and, at that moment, you're charged interest on $550,000 either way. The difference isn't the saving — it's where the saving shows up.
With an offset, your repayment doesn't change. More of each repayment goes to principal, so the loan is paid off sooner and you save more interest over its life. You also keep instant, everyday access to the money — it sits in a normal transaction account.
With redraw, your loan balance is genuinely lower, so the lender usually recalculates your minimum repayment down. That frees up cash flow now, over the same loan term. Keep paying the original amount and you end up in the same place as an offset.
If the property might ever become an investment, an offset keeps your loan balance — and future tax-deductibility — clean. If discipline is the issue, redraw adds helpful friction. And if you're on a fixed rate, redraw may be your only lever.
It's a small decision that compounds. If you'd like us to model it against your actual loan, that's a quick conversation.
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