- Published on
Mortgage Offset Account vs Redraw Facility Guide Australia
- Authors
- Name
- Charlotte Smith
- https://x.com/CharlotteSmithAU
Mortgage Offset Account vs Redraw Facility Guide
Both offset accounts and redraw facilities help Australian home loan borrowers save thousands of dollars in interest, but they function differently under Australian tax law.
Offset Account vs Redraw Comparison
| Feature | 100% Offset Account | Redraw Facility |
|---|---|---|
| Account Type | Separate bank transaction account | Feature built directly into the home loan |
| Access | Instant debit card & online transfer | Transfer request via online banking |
| Tax Treatment | Preserves original tax deductibility | Can alter tax deductibility if reused for investment |
| Fees | May carry package annual fees (400) | Usually free or low transaction fee |
Daily Interest Offsetting
Home loan interest in Australia is calculated daily based on your net principal balance: Net Principal = Total Loan Principal - Offset Balance
Holding 500,000 mortgage at 6.0% interest saves $3,000 per year in interest while keeping funds 100% accessible.
Calculate your interest savings using our free Offset Calculator.