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When it comes to home loans, two popular options for managing your finances are redraw facilities and offset accounts. These features can help you save money and pay off your loan faster, but they work differently. Here's a quick overview of the distinctions:
Redraw Facility
allows you to access extra payments you've made on your home loan. You can withdraw these additional funds for various purposes, such as emergencies or investments.
The funds are typically not as readily available as in an offset account and might involve some processing time or fees.
Helps you save on interest, but it may not offer as much liquidity as an offset account.
Useful for borrowers who want to reduce interest costs while keeping the option to access extra payments if needed.
May charge a withdrawal fee - best not to use this account for regular transactions
Offset Account
is a transaction account linked to your home loan. The balance in this
account is offset against your loan balance, reducing the interest you pay.
It's like your savings working to reduce your loan amount.
The funds in an offset account are readily available for daily expenses and can be accessed through a debit card or online banking.
Provides a high level of liquidity while effectively lowering your interest expenses.
Useful for borrowers who want to minimize their interest payments while maintaining easy access to their savings.
May charge a monthly/annual fee - best to calculate if your savings will outweigh this cost.
Both redraw facilities and offset accounts can be valuable tools for managing your home loan and finances, but the choice depends on your preferences and priorities. Let us help you decide which option is best for you!
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ANDREA PALELLA (O'SHEA)
DAVID FRENCH
MATHEW CROSSLEY
MATTHEW GOODYEAR
