Free: Home Loan Structure Review
We'll review your current or upcoming loan structure and confirm you have the right offset/redraw setup for your situation.
When choosing a home loan, you'll almost certainly be asked: "Do you want an offset account, redraw facility, or both?" Most people choose without fully understanding the difference — which can lead to the wrong loan structure for their situation.
Both features save you interest. But they have different implications for accessibility, flexibility, and tax — especially if you ever plan to turn your home into an investment property.
Head-to-Head Comparison
| Feature | Offset Account | Redraw Facility |
|---|---|---|
| How it works | Separate transaction account; balance offsets your loan principal | Extra repayments sit inside the loan; you can withdraw them back |
| Interest saved | On every dollar in the offset account | On every dollar of extra repayments made |
| Accessibility | Instant — like any bank account (debit card, BPAY) | Usually instant online; some lenders may have minimum amounts or delays |
| Lender can restrict access? | No — it's your own bank account | Yes — in hardship or lender policy change, redraw can be suspended |
| Interest calculation | Daily on (loan balance minus offset balance) | Daily on (loan balance minus extra repayments) |
| Available on variable rate loans | Yes (most) | Yes (most) |
| Available on fixed rate loans | Rarely (some limited offset) | Usually no (or very limited) |
| Loan fee | Usually comes with a package fee ($395–$750/year) | Usually free on basic variable loans |
| Tax implications | Funds remain your money — no tax issue when withdrawn | Redrawing for personal use while loan is used for investment can affect deductibility |
Worked Example: How Both Save Interest
Same scenario, two structures:
- Loan: $600,000 at 6.00% p.a. variable
- Savings: $50,000
| Offset Account | Redraw | |
|---|---|---|
| Loan balance | $600,000 | $600,000 (less $50K extra repayments = $550,000 effective) |
| Balance interest charged on | $550,000 | $550,000 |
| Daily interest saved | $50,000 × 6% ÷ 365 = $8.22/day | $50,000 × 6% ÷ 365 = $8.22/day |
| Annual interest saved | ~$3,000 | ~$3,000 |
The interest saving is identical. The difference is entirely in how you access, control and use the funds.
The Tax Trap: Why Investors Must Choose Carefully
This is the most important distinction — and the one most people miss.
This is why most mortgage brokers recommend an offset account over redraw for anyone who might eventually convert their home to an investment property — even if that's 5–10 years away.
When Redraw Makes Sense
Despite the tax caveat, redraw is a perfectly good feature in the right scenario:
- You're on a basic variable rate loan with no package fee — the interest saving is the same, just without the annual package cost
- You're certain you'll never convert to an investment property
- You want to build equity faster without maintaining a separate account to manage
- Your lender's offset comes with a higher rate that offsets the benefit
Decision Guide
| Your situation | Best choice |
|---|---|
| Owner-occupier; no plans to invest | Redraw (basic variable; lower fee) or offset (if package rate is competitive) |
| Owner-occupier; might invest later | Offset — future-proof your tax position |
| Investor from day one | Offset — protects loan deductibility |
| Fixed rate loan | Neither fully available — consider split loan (fixed + variable with offset) |
| Want maximum flexibility | Offset — instant access, no lender restrictions |
FAQs
our broker team recommends loan structures to every client based on their long-term plans — including whether they might eventually invest. Getting this right at purchase can save thousands in tax over the loan lifetime.
Make Sure Your Loan Is Structured Right
We'll recommend the right structure based on your situation — owner-occupier, investor, or future-proofed for both.
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